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You can also reach the IA disclosure site through the Texas State Securities Board’s website, 

www.ssb.texas.gov.

Brokers

The terms broker and broker-dealer are legal terms that refer to people and firms who  

are in the business of buying and selling securities on behalf of customers.

Individual salespeople employed by brokerage firms are called stockbrokers and are  

officially referred to as registered representatives. But these individuals use other unofficial 

titles, too, including financial consultant, financial adviser, and investment consultant. In 

recent years, brokerage firms have offered a broader range of investment planning services 

in addition to trading securities.

Many brokers’ compensation is based on the commissions clients pay each time they  

buy or sell a security—a potential conflict of interest that could mean investors end up  

paying more than they should when brokers trade excessively or sell products for which 

they receive exceptionally high commissions.

Unlike investment advisers, brokers are under no legal obligation to act as fiduciaries or  

in your best interest. They are required to recommend only assets that are suitable for you, 

based on your financial situation, needs, and other securities you hold.

”

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Form Adv: Essential Adviser information

Investment advisers are required to provide their background information on  

Form

 Adv, which is split into two parts.

Part 1 is a check-the-box form with information about the IA’s business, employees,  

ownership, clients, and any disciplinary actions involving the IA or its employees.

Part 2 is a narrative that serves as the primary disclosure document for investment 

advisers. It contains information about:

•

  The IA’s business practices and any significant changes the firm has undergone  

recently

•

  Fees and compensation

•

   Conflicts of interest that the firm has or may have in representing you

•

  Types of clients the firm has

•

  Disciplinary information, if any, about the firm and its employees

•

  When and how the firm reviews client accounts

•

  Financial information about the firm

Investors should thoroughly review Parts 1 and 2 of Form ADV before doing business  

with an investment adviser. Both parts of Form ADV are available to the public at the  

SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov.