Is Your Financial Adviser Really a Salesperson?

What's the difference between a financial adviser and salesperson? The difference is intentionally blurry. The financial industry spends big bucks advertising messages like "you can trust us" and "we put you first." Investors are understandably confused about which of the people who call themselves "advisers" are really advisers, and that's the way the industry would like to keep things. In court papers, brokers and insurance companies argue forcefully that their salespeople are exactly that -- salespeople -- and that they don't have any obligation to put their clients first. Even if they carry the title "adviser."

So you need to take matters into your own hands. Find out if your "adviser" is registered with the Securities and Exchange Commission, which is the true measure of whether they have a fiduciary duty to you. If you check a regulatory database called Brokercheck, a fiduciary will be listed as an investment adviser. If they're not an investment adviser, they have no obligation to put you first.

While advisers are held to a higher standard than brokers, that doesn't mean they don't break the rules. What it does mean is that if you lose money because they scammed you, you have a stronger legal case against them than you would if you'd been working with a broker.

This article was written by a staff member of TheStreet.