Legal Definitions - registered representative

A registered representative is an individual licensed by a regulatory authority, such as FINRA, to sell securities and provide investment advice on behalf of a broker-dealer. This registration ensures they meet professional standards and are authorized to conduct such business with the public.

A registered representative is an individual who is licensed and authorized to buy and sell securities, such as stocks, bonds, and mutual funds, on behalf of clients. To operate legally, they must be registered with the appropriate regulatory authorities, such as the Financial Industry Regulatory Authority (FINRA) in the United States, and typically work for a licensed broker-dealer firm. This registration ensures they meet specific educational, ethical, and professional standards required to provide investment advice and execute transactions for the public.

Here are some examples illustrating the role of a registered representative:

• Example 1: Retirement Planning

  Sarah, who is nearing retirement, decides to roll over her 401(k) into an Individual Retirement Account (IRA). She consults with an investment advisor at a large financial services firm. This advisor helps Sarah select a diversified portfolio of mutual funds and bonds tailored to her risk tolerance and retirement goals. The advisor then executes the trades to purchase these investments within Sarah's new IRA. This advisor is acting as a registered representative because they are licensed to provide investment advice and facilitate the buying and selling of securities for Sarah's account.

• Example 2: Managing a Trust Fund

  The trustees of a charitable foundation need to invest the foundation's endowment to generate income for its philanthropic activities. They engage an investment professional at a wealth management firm to manage the portfolio. This professional regularly reviews market conditions, recommends specific stocks and bonds, and executes trades to maintain the portfolio's objectives. This investment professional is a registered representative, as they are legally authorized to manage and trade securities within the foundation's trust, adhering to regulatory guidelines.

• Example 3: Individual Stock Trading Advice

  David, a young professional, wants to start investing in individual company stocks but feels overwhelmed by the choices. He opens an account with a brokerage firm and opts for a service that includes personalized guidance from an advisor. This advisor discusses David's financial goals and risk appetite, then suggests specific stocks and helps David place buy orders. The advisor is a registered representative because they are licensed to offer investment recommendations and execute securities transactions on behalf of clients like David.