Who regulates RIAs and broker-dealers?
Investment advisers and broker-dealers are governed by different federal statutes. Advisers fall under the Investment Advisers Act of 1940 and are overseen by the SEC or by state securities regulators, depending mainly on size. Broker-dealers fall under the Securities Exchange Act of 1934 and register with the SEC under Section 15(b) of that law.
The size line for advisers is regulatory assets under management. As Kitces explains, an RIA generally must move from state to SEC registration once it reaches the threshold of $100 million in regulatory assets under management. The Dodd-Frank Act raised the federal threshold from $25 million to $100 million, according to law firm Day Pitney, and a $25 million threshold still applies in certain cases, such as advisers based in a state that does not examine them or advisers that would otherwise have to register in 15 or more states.
Broker-dealers have an additional layer of oversight. FINRA describes itself as a self-regulatory organization responsible under federal law for supervising its member broker-dealers. It writes and enforces rules for brokers and examines firms, and it operates under SEC oversight rather than as a government agency. FINRA does not regulate investment advisers in their advisory business.
What standard of conduct applies to each?
Investment advisers are fiduciaries. In a June 2019 interpretation (Release No. IA-5248), the SEC said an adviser's fiduciary obligation to act in a client's best interest includes a duty of care and a duty of loyalty. The duty of care requires a reasonable inquiry into the client's objectives and advice that suits them. The duty of loyalty bars an adviser from placing its own interests ahead of the client's and requires full and fair disclosure of material facts and conflicts. Law firms that reviewed the release noted the SEC presented it as reaffirming existing law rather than creating new obligations.
Broker-dealers follow Regulation Best Interest, adopted by the SEC on June 5, 2019, as Rule 15l-1 under the Exchange Act. The SEC said Reg BI goes beyond the older suitability standard: a broker-dealer recommending a securities transaction to a retail customer must act in that customer's best interest and may not put its own interests ahead of the customer's. The rule is met by satisfying four component obligations, including disclosure. Firms had to comply by June 30, 2020.
How different the two standards are in practice has been debated. SEC staff said in a 2023 bulletin that Reg BI and the adviser fiduciary standard generally produce substantially similar results for retail investors on the duty of care, despite differences in how each applies, according to law firm Sidley Austin.
The same 2019 package created Form CRS, a short relationship summary that broker-dealers and advisers must give retail investors describing their services, fees and conflicts. This guide is general information, not legal or investment advice.
How do RIAs and broker-dealers get paid?
The SEC's investor education site, Investor.gov, describes the typical models. Brokers generally charge a transaction-based fee, usually called a commission, each time a customer buys or sells an investment. Investment advisers typically charge an ongoing fee calculated as a percentage of the assets in the account; Investor.gov gives the example of a 1.5% annual fee on a $50,000 account, or $750 a year, and notes the percentage tends to be higher on smaller accounts.
Each model carries its own conflicts, which firms disclose in Form CRS. A commission can create an incentive to trade more often, while an asset-based fee rewards growing the account, including by encouraging clients to move more money into it. Firm disclosures also show that registered representatives can receive commissions on products separate from any advisory fee.
Investor.gov notes that some professionals wear two hats and act as both brokers and investment advisers. In that case, the capacity in which they are acting determines both how they are paid and which standard of conduct applies.
How do firms and individuals register?
At the firm level, an investment adviser registers on Form ADV. Part 2 of Form ADV is the brochure that must be given to clients, written in plain English and covering services, fees, conflicts of interest and disciplinary history; Part 2B supplements describe the individuals who advise clients, according to the SEC. A broker-dealer registers on Form BD, which discloses its ownership, affiliations, officers, planned business lines and disciplinary history. Form BD is filed through FINRA's Central Registration Depository, and the SEC has 45 days to grant registration or begin proceedings to deny it. The firm must also apply separately for FINRA membership.
Individuals are registered differently in each channel. People who give advice on behalf of an RIA are investment adviser representatives, or IARs, and are generally licensed by the states. People who handle securities transactions at a broker-dealer are registered representatives, often called brokers.
The exams follow the same split. The Series 65, NASAA's Uniform Investment Adviser Law Examination, qualifies a person as an IAR on its own. The Series 66, the Uniform Combined State Law Examination, qualifies a person as both a securities agent and an IAR, and NASAA says the Series 7 is a corequisite. The Series 7 is FINRA's general securities representative exam taken by brokers. NASAA notes that passing an exam does not by itself allow a person to do business before a state grants a license or registration.
How can you check an RIA or a broker?
The SEC's Investment Adviser Public Disclosure (IAPD) site covers SEC- and state-registered advisory firms and their representatives. According to Investor.gov, it shows registration status, employment history and disciplinary events, which it calls disclosures, and it lets users read firms' Form ADV filings.
FINRA's BrokerCheck covers brokers and brokerage firms. For individuals, it shows exams passed, prior employment, customer disputes and regulatory or disciplinary events; for firms, it shows history, registrations, arbitration awards and disciplinary actions. Both tools are free, and a search on Investor.gov can route a user to either one.
Investor.gov also suggests contacting the state securities regulator for more information, which is especially relevant for smaller, state-registered advisers. A professional who is dually registered will generally appear in both databases.
What are the main channels where advisors work?
Industry researchers such as Cerulli Associates sort advisors into channels. Wirehouses are the large national brokerage firms, such as Morgan Stanley, Merrill, UBS and Wells Fargo, where advisors are employees. Regional and national broker-dealers follow a similar employee model on a smaller footprint. At independent broker-dealers, advisors are generally independent contractors who run their own practices and clear business through the broker-dealer. Independent RIAs are advisory firms that are not affiliated with a broker-dealer.
Between those sit hybrid arrangements. Kitces distinguishes between an advisor who is dually registered with a broker-dealer and that broker-dealer's corporate RIA, and a true hybrid advisor who keeps a broker-dealer registration for commission business while running a separate, independent RIA. The outside RIA must be disclosed to and approved by the broker-dealer as an outside business activity, and not every broker-dealer allows it.
Dual registration is now common. FINRA's 2026 Industry Snapshot reported that, as of year-end 2025, 331,802 individuals, more than half of FINRA-registered representatives, were registered both as brokers and as investment adviser representatives, while 307,921 held broker-dealer-only registrations and 94,562 held investment-adviser-only registrations.
How big are the RIA and broker-dealer industries?
On the adviser side, the Investment Adviser Association's annual report with COMPLY, the 2026 Investment Adviser Industry Snapshot (previously titled Evolution Revolution), counted 16,544 SEC-registered investment advisers in 2025, a record and an increase of 674 firms from the prior year. Those advisers managed $176.8 trillion in regulatory assets, up 22.3%, served 73.7 million clients and employed 1.1 million non-clerical workers. The report found that 92.8% of advisers had 100 or fewer employees. These figures cover only SEC-registered firms, not state-registered advisers.
On the brokerage side, FINRA's 2026 Industry Snapshot reported 3,184 FINRA-registered broker-dealers at the end of 2025, down from 3,249 a year earlier, and 639,723 registered representatives, up from 634,498.
Assets have been shifting toward advisory models. Cerulli Associates reported in February 2026 that the independent and hybrid RIA channels together held 27% of industry assets in 2024, up from 21% a decade earlier, driven largely by advisors leaving other channels, and that 71% of advisors say they would choose an independent channel if they switched firms. Those moves, known as breakaways, often involve a change from broker-dealer registration to an RIA.