Financial Advisor
A professional who provides clients with financial guidance on investments, retirement, insurance, taxes, and overall financial planning.
What is Financial Advisor?
A financial advisor is a broadly used term for professionals who provide financial guidance to individuals and families, covering areas such as investment management, retirement planning, insurance needs, tax strategies, and estate planning. The term is not regulated in the US — anyone can use it — so consumers must look for credentials (CFP, CFA), fiduciary status, and compensation structure to evaluate an advisor's qualifications and conflicts. Registered Investment Advisors (RIAs) are regulated by the SEC or state regulators and must act as fiduciaries. Broker-dealers follow a suitability standard, which only requires recommendations be suitable — not necessarily in the client's best interest. The SEC's Regulation Best Interest (Reg BI), effective 2020, raised standards for broker-dealers but stops short of full fiduciary duty.
Example
A couple approaching retirement interviews two 'financial advisors.' Advisor A is a registered investment advisor (RIA) charging 1% of assets annually, legally required to act as a fiduciary. Advisor B is a broker-dealer representative earning commissions on products sold, held to a suitability standard. The difference matters significantly: Advisor A must recommend the best available fund; Advisor B may recommend a more expensive fund that pays higher commissions.
Source: SEC — Investment Advisers