The registration status is important because only investment advisors are required to follow a fiduciary standard. Brokers and dually registered advisors (advisors registered as both an investment advisor AND a broker) are more likely to have conflicts of interest. For example, brokers may be incentivized to promote certain products over others because they can receive a higher sales commission. Similarly, brokers can participate in a revenue sharing program.
Advisors are registered with the SEC and held to a fiduciary standard. (1) They provide financial advice and are legally obligated to act solely in the best interest of their clients. Certified Financial Planners (CFPs) are also required to as a fiduciary.
Brokers are registered with FINRA and only held to a “suitability” rule. They receive commissions based on the products they sell, not the ongoing advice they provide, and can recommend a transaction if there is a “reasonable basis to believe” it's suitable for the customer. (2)
Dually registered advisors act as both an advisor and a broker. Since they are registered with both the SEC and FINRA, like brokers, they are more likely to have conflicts of interest because they can switch legal obligations at any time.