Investing in exchange traded funds (ETFs) and investing in general can be tricky. Sometimes lines can blur. For example, do you know the difference between a broker and a financial adviser? Matt Hougan for Index Universe reminds us why it’s essential to know each position’s role. If you don’t, let’s review:
- Brokers
Brokers are individuals that act as an intermediary between a buyer and a seller and usually charge a fee for their role. The National Association of Securities Dealers (NASD) requires that brokers recommend "suitable" investments to clients. However, the key word is recommend; brokers are not obligated to act in their clients’ best interest. In other words, be cautious about accepting financial advice from brokers. - Financial advisers
Financial advisers manage assets and provide investment advice. They can be independently employed or employed by an investment company. Advisers have a fiduciary duty to act in the clients’ best interest and to make disclosures of all material facts, especially if there may be a conflict of interest. As the name implies, these are the people you want to go to for financial advice.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.