Saga of Financial Markets


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Broker Vs Investment Advisor

Goldman Sachs’s saga – that it has been probed by SEC for its role on the global financial crisis, essentially fall back on the level of responsibility, i.e. a broker or an investment adviser that it has towards its clients.

What is the different between a broker and an investment adviser?  An investment adviser has fiduciary duties to act for the best interests of its clients; a broker is just required to carry out transactions at the direction of clients and is not really obligated to disclose its own interests or conflicts in a given transaction.

Rarely one would ever question a seller whether he is a broker or an investment adviser during the transaction.  But it is time to note the subtle different of the role played between the two: broker vs investment adviser.

Reference:  MarketWatch, Kurt Brouwer, 2010-04-28, “Goldman Sachs:  Let the clients beware”.