Types of financial advisors: RIAs, broker-dealers, dual registrants, and insurance producers

"Financial advisor" is one of the most common job titles in finance, and one of the least specific. It isn't a license, and people in different roles use it, though the SEC presumes that a broker who isn't also a supervised person of an investment adviser breaks its rules by using "advisor" in a title. What actually matters is the registration behind the title, because that decides how the person is regulated, how they're paid, and what standard they owe you. There are four main kinds.

Investment adviser representatives of RIAs

These people work for a registered investment adviser, a firm registered with the SEC or a state to give investment advice for a fee. RIAs owe clients a fiduciary duty: to act in your best interest and to disclose conflicts. They file Form ADV, which is what AdvisorCensus is built from. Pay is usually a percentage of assets, a flat fee, or an hourly rate.

Registered representatives of broker-dealers

Often called brokers, these people work for a broker-dealer and are regulated by FINRA and the SEC. They typically earn commissions on transactions. When recommending investments to retail customers, they're held to Regulation Best Interest, a standard that's meaningful but different from the ongoing fiduciary duty of an adviser. You'll find them on FINRA BrokerCheck.

Dual registrants

Many people and firms are both. A dual registrant might manage one account as a fiduciary adviser for a fee and sell you an annuity as a broker for a commission. That's legal and common. It just means it's worth asking, for each recommendation, "Which hat are you wearing right now?"

Insurance producers

Licensed insurance agents sell insurance and annuities and are regulated by state insurance departments. Some also hold securities registrations; many don't. If the conversation is mostly about annuities or life insurance, you may be talking with someone licensed only for insurance.

How to tell which one you're talking to

• Search the person on the SEC's IAPD site and on FINRA BrokerCheck. The records show whether they're registered as an investment adviser representative, a broker, or both, and with which firms.
• Look up the firm's Form ADV. Item 5.E shows whether it earns commissions; Part 2A, Item 10, describes any broker-dealer or insurance affiliations.
• Ask them directly. It's a fair question, and a clear answer is a good sign.

Where AdvisorCensus fits

AdvisorCensus lists the registered investment advisory firms that file Form ADV, the first category above, along with exempt reporting advisers, one page each; firms may ask to be removed. A firm's broker-dealer or insurance ties show up in Items 5.B, 6.A, and 7.A of its filing, not in its compensation arrangements, which is why AdvisorCensus's fee-only test checks those items too. Every page links to the official record.