YOUR mOST ImPORTANT FINANcIAl dEcISIONWhAt ARe the DIFFeRent kInDs oF
FInAnCIAl PRoFessIonAls?Did you know that though there over 90 different titles for financial pro-
fessionals, yet the federal government only recognizes three types? The
three types of federally-recognized financial professionals are Registered
Representatives, Insurance Agents, and Investment Advisor Representa-
tives. The following describes each group’s capa-
bilities and services.
Registered Representatives
The first and most common type of financial
professional is called a Registered Representa-
tive, or stockbroker. Registered Representatives
are regulated by Financial Industry Regulatory
Authority (FINRA), which operates under the
oversight of the Securities and Exchange Com-
mission (SEC). All Registered Representatives must be employed by a
FINRA Member Broker Dealer to sell financial products such as stocks,
bonds, and mutual funds. In addition, Registered Representatives must
hold a series G3 State license and either a Series 6 or Series 7 securities
license.
FINRA calls a person who holds these licenses a Registered Representa-
tive because he or she is registered with FINRA and is a representative
of the brokerage firm with which he or she is affiliated. Brokers are
considered by FINRA and the SEC to be product salespeople whose job
is to represent the best interests of their firms. According to the regu-
lators, brokers sell investment products in order to earn commissions;
they are not paid to give advice, and any advice they do give is consid-
ered “incidental” to the sale of their products. In fact, the SEC requires
that monthly statements issued by brokerage firms include the following
disclosures: “Your account is a brokerage account and not an advisory
account. Our interests may not always be the same as yours...Make sure
your understand.... The extent of our obligations to disclose conflicts of
interest and to act in your best interest....Our salespersons’ compensa-
tion may vary by product and over time.”
Registered Representatives make money by selling financial products that
their broker dealer represents. The most common products sold are in-