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There is a difference and most people aren’t aware of that. A stockbroker is somebody who is compensated through commissions in trading an investment account whereas an investment advisor is paid an advisory fee so they’re typically paid two percent or some small percent of the portfolio value as their compensation. Now what does that mean to an investor? It shouldn’t mean anything because investors are hiring a person that they trust they’re not really aware of the difference between the two. Historically, stockbrokers were held to an ordinary standard of care whereas investment advisor was held to a fiduciary standard of care. In my view, and I think the trend in the industry is that stockbrokers and investment advisors are all held to a fiduciary standard of care.
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Minneapolis, MN investor advocacy attorney F. Chet Taylor talks about the difference between a stockbroker and an investment advisor.