United States Advisors typically fall into two separate categories:
broker-dealers (BD) who typically earn a commission from sales and
registered investment advisers (RIAs) who typically charge a fee based upon assets under management while serving as
fiduciaries and are registered at the state or federal level. Additionally, an advisor can be either affiliated with a large firm ("wirehouse") or be independent (e.g., independent broker-dealer or IBD). The number of independent broker-dealer firms has declined from 1175 in 2007 to 819 in 2018, while RIA firms have grown from 9,538 to 15,645 over the same time period. As of 2016, the largest IBD firm by revenue was
LPL Financial followed by
Ameriprise Financial and
Raymond James Financial.
Edward Jones is another large broker-dealer, and in 2017 stopped selling commission-based funds in response to a best interest
fiduciary rule by the
Department of Labor (DOL). As of 2019,
Merrill Lynch had not adopted an RIA model while Wells Fargo and Goldman Sachs had opened up to the business model. As of 2019, the largest fee-only RIA firm was
Edelman Financial Engines with over $200 billion in assets under management, under the ownership of private equity firm
Hellman & Friedman. Other large fee-only RIA firms include
Fisher Investments, which has over $120 billion in assets under management. As of 2019, 80% of the $4 trillion managed by RIAs were on one of four platforms:
Fidelity Investments,
Schwab, and
Pershing LLC. Some RIAs operate inside "RIA aggregators" which provide institutional support similar to a wirehouse. In the
United States, the
Financial Industry Regulatory Authority (FINRA) regulates and oversees the activities of
brokerage firms, and their registered representatives. The
Securities and Exchange Commission (SEC) regulates investment advisers and their investment adviser representatives. Insurance companies, insurance agencies and insurance producers are regulated by state authorities. Investment Advisers may be registered with state regulatory agencies, the Securities and Exchange Commission, or pursuant to certain exemptions, remain unregistered. In the United States, a financial adviser carries a
Series 7 and
Series 66 or
Series 65 qualification examination. According to the U.S.
Financial Industry Regulatory Authority (FINRA), qualification designations and compliance issues must be reported for public view.
Fiduciary standard The anti-fraud provisions of the
Investment Advisers Act of 1940 and most state laws impose a duty on Investment Advisors to act as
fiduciaries in dealings with their clients. This means the adviser must hold the client's interest above its own in all matters. The SEC has said that an adviser has a duty to: to the fiduciary standard. In June 2016, as a way to address adviser conflicts of interest, the DOL ruled in a redefinition of what constitutes financial advice, and who is considered a fiduciary. Prior to 2016, fiduciary standards only applied to Registered Investment Advisers (RIAs), and did not impact brokers, who previously operated under a less strict "suitability" standard that provided leeway to provide education without "advice". The new ruling requires all financial advisers who offer advice for compensation to act as fiduciaries and meet the fiduciary standard, but only when dealing with retirement accounts such as IRA or 401(k) accounts. The ruling includes one exemption for brokers, Best Interest Contract Exemption, which can be allowed if the broker enters into a contract with the plan participant and meets certain behavioral requirements. The new ruling does not impact the advice or investment product sales pertaining to non-retirement accounts. Opposition to the fiduciary standard maintains that the higher standard of fiduciary duty, vs the lower standard of suitability, would be too costly to implement and reduce choice for consumers. Other criticisms suggest that consumers with smaller retirement accounts may be less able to access personalized advice due to advisor/broker compensation models, many of which have been restructured to comply with the fiduciary rule. The decision has caused a massive shift in the financial community. One survey found that 73% of advisors were concerned the rule would have an adverse impact on how they do business, 71% anticipated increased client frustration, and 66% planned to reevaluate the products they recommend. Enforcement of the rule began on 9 June 2017 but is no longer enforced since the DOL fiduciary rule was officially vacated on 21 June 2018 by the U.S. Fifth Circuit Court of Appeals. On 5 June 2019, the SEC adopted Regulation Best Interest, establishing a new standard of conduct under the Securities Exchange Act of 1934 (“Exchange Act”) for broker-dealers, with compliance due to begin 30 June 2020. In July 2020, the DOL proposed a new fiduciary rule, and made two changes to guidance and regulation.
Registration A
registered investment adviser (RIA) refers to an IA that is registered with the SEC or a state's securities agency and typically provides investment advice to a
retail investor or registered
investment company such as a
mutual fund, or
exchange-traded fund. Registered Investment Advisors are regulated by either the SEC or by the individual states, depending on the amount of assets under management.
Canada '
In Canada, the spelling “financial advisor” (with an o
) is the standard form used by regulators, credentialing bodies, and the financial services industry, including FSRA, CIRO, FP Canada, and major financial institutions.' The financial advisory industry in Canada is regulated through multiple frameworks depending on the products and services an individual is licensed to provide. In Ontario, the titles “Financial Planner” and “Financial Advisor” are legally protected under the Financial Professionals Title Protection Act, administered by the Financial Services Regulatory Authority of Ontario (FSRA). Individuals may use these titles only if they hold an approved credential from an FSRA‑approved credentialing body. Insurance advisors may distribute life and health insurance, segregated funds, annuities, and related products. Many operate through Managing General Agencies (MGAs), which serve as distribution intermediaries rather than regulatory categories.
Securities‑licensed advisors are regulated nationally by the Canadian Investment Regulatory Organization (CIRO), formed in 2023 through the consolidation of the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC). Mutual fund representatives may complete a mutual funds licensing course, which permits the sale of mutual funds but not individual equities or certain specialized products. Additional licensing is required for derivatives, options, and exempt market securities.
Financial planners provide comprehensive financial planning services, including retirement, tax, estate, and risk management planning. In Ontario, the titles “Financial Planner” and “Financial Advisor” are legally protected under the Financial Professionals Title Protection Act, administered by the Financial Services Regulatory Authority of Ontario (FSRA). Individuals may use these titles only if they hold an approved credential from an FSRA‑approved credentialing body. Saskatchewan has also adopted title protection legislation for financial planners and advisors. Common financial planning designations in Canada include the
Certified Financial Planner (CFP), Qualified Associate Financial Planner (QAFP), Personal Financial Planner (PFP),
Professional Financial Advisor (PFA), Chartered Life Underwriter (CLU), Registered Retirement Consultant (RRC) and Registered Financial Planner (R.F.P.). It is the recognised benchmark designation for financial advisers working in
retail financial services. The qualification, and attaching CPD programme, meets the "minimum competency requirements" (MCR) specified by the Financial Regulator, for advising on and selling five categories of retail financial products: • Savings, investments and pensions • Housing loans and associated insurances • Consumer credit and associated insurances • Shares, bonds and other investment instruments • Life assurance protection policies
New Zealand The National Certificate in Financial Services [Financial Advice] [Level 5] is currently being introduced in New Zealand. All individuals and registered legal entities providing financial services must be registered as a (Registered Financial Service Provider). Their Directors, retail and sales staff are required to gain the national certificate. The
New Zealand Qualifications Authority (NZQA) in conjunction with industry groups via the ETITO administers a qualifications frame work for the qualification. Registrations and examinations are conducted by the ETITO. All financial advisers are required to register with the ETITO by March 31, 2011. The Qualifications Framework consists of a core set of competencies sets, A B C followed by 2 electives covering specialist areas such as Insurance and Residential Property Lending. Certain NZQA approved qualifications such as an Accountancy degree may exempt students from competency set A NZQA approved training. The certificate is offered by the accredited organizations.
South Korea In
South Korea, the
Korea Financial Investment Association oversees the licensing of investment advisers.
Australia Financial advisors in Australia must have passed a
RG146 qualifying and hold a license that is overseen by the
Australian Securities and Investments Commission. It ought to be noted that financial advisers in Australia will need to undergo transitional arrangements as new educational requirements will be in place on 1 January 2019. Additionally, financial advisers in Australia are subject to fiduciary obligations.
India The
Securities and Exchange Board of India (SEBI) is the
regulator for the
securities market in
India. It was established in 1988 and given
statutory powers on 12 April 1992 through the
SEBI Act, 1992. In India, SEBI registered investment advisor is referred, when an investor who would like advice on where to invest in share market or an investor. SEBI has put certain guidelines before giving RIA license to any individual, corporate or firms. In India, there are 1160 RIAs as of 31 January 2020, who are registered with SEBI as registered investment advisor (2013) regulations. ==See also==