What is a broker/dealer in the context of a Registered Investment Advisor (“RIA”)?

Definition: A broker-dealer buys and sells securities, acting as either an agent (broker) for clients or as a principal (dealer) trading from their own account. In the wealth management space, such entities are commonly used to refer to firms where affiliated financial advisors provide transactional investment services for clients on a commission basis.

When used in an RIA context: “The financial advisor works for a broker-dealer where they provide investment solutions to their clients, and are compensated for the transaction with a commission.”

See also: Episode 127, BD