Investment Advisors provide advice, recommendations, issuing of reports, and analyses on securities, for a fee. Advisors follow the Fiduciary Standard that requires them to "act in the best interest of the client", specifically they must put their "clients' interests above their own." (Regulated by the SEC).
Brokers, on the other hand, are paid via commissions tied to investments in the funds they select for their client's retirement plans. Brokers follow the Suitability Rule, which states that a Broker must believe the recommendations they are giving are consistent with the interests of the client's financial needs and situation at the time. Many believe the Suitability Rule leaves room for conflicts to arise, since the rule does not set standards around conflicts of interest. (Regulated by FINRA).
Most brokers operate under what is called the “suitability standard”, which simply means that the securities they recommend must be appropriate for you given your financial profile. However, many of the securities that can be considered “suitable” may be far from the best investments options available at a particular time.
You may be surprised to learn that brokers working under the suitability standard are not legally obligated to find the best prices or the best investments to help you accomplish your goals. As a result, your broker may offer you securities that provide lower returns and carry more significant risks than other alternatives as this can be more profitable for the broker. The suitability standard can apply to brokers that sell insurance, annuities, stocks, or other investment types.
With a broker, you are working with a salesperson who may or may not have your best interests in mind. On the other hand, Registered Investment Advisers (RIAs) are firms which operate under the fiduciary standard, meaning that they are legally obligated to put their clients’ interests first.
There are also firms known as Fee-Only RIAs, which operate under the same fiduciary standard, but differ in that they only accept compensation directly from their clients in the form of management fees. This helps to ensure that Fee-Only RIAs provide unbiased and objective investment advice without third-party incentives of any kind. For more information regarding a particular RIA’s compensation model, you may consult the firm’s brochure (also called the Form ADV Part II) which is typically available on the firm’s website or upon request.
I've been both and am now an independent registered investment advisor. In a nutshell, brokers have a natural conflict of interest. What is best for them and their brokerage firm many not be best for you, the client. Many brokers are good people and try to work around these inherent conflicts. However, it is a work-around and not a solution. Anyone can call themself an "advisor." Check their disclosure brochure, called the ADV, carefully to see if they have a brokerage affiliation. If so, then they will still have conflicts which they must disclose. You can also tell by looking at their business card for the words "Securities Offered Through..." indicating a brokerage affiliation. You can get good advice from both kinds. Yet, given the choice between two highly ethical, competent and experienced advisors - one a broker and one a fee-only Registered Investment Advisor - you probably want to hire someone who is just on your side. I know I would.
You are already on a great site that can help find "fee-only" advisors. You pay fee-only advisors directly, you know exactly what you are paying and they help you find the strategies, investments, products based on your needs.
In the "financial advisor directory" you can search for "fee-only" advisors. Good luck.
The problem with the question as you ask it is that the term "financial advisor" is now used by all manner of brokers, insurance agents, etc. - so much so that the term is now meaningless. If you are looking for broad based advice based on your overall life situation, you will probably want to be working with a Certified Financial Planner. Some CFP's do make some of their income from commissions - but we have all taken a fiduciary oath to put our clients best interest first. Fee only advisors forsake all commissions, in an effort to align their interests fully with those of their clients. You can find a local CFP at www.letsmakeaplan.org and a directory of fee only planners at www.napfa.org.
There may be a difference in the level or type of services provided...although it could just be the title.