An intermediary is a person, firm, or platform that connects two parties who want to exchange value but lack a direct path to each other. The exchange can involve money, property, securities, or cargo, and the intermediary’s job is to lower the cost and friction of finding the right counterpart and settling terms. A bank pooling deposits into loans is an intermediary. So is a freight forwarder routing a container across borders, a real estate agent bringing a buyer and seller together, and a payment app moving funds from your account to someone else’s in seconds.
The category is broad on purpose. What ties these roles together is the structural position: standing between two sides of a transaction and making the transaction possible. What separates them is the kind of value being moved and the rules that apply.
Financial Intermediaries
Commercial banks are the most familiar type. They take deposits from millions of individual savers and convert that pooled capital into mortgage loans, business credit lines, and other lending products. The spread between what a bank pays depositors and what it charges borrowers is the core of the business model.
Credit unions use the same deposit-and-lend structure but are member-owned cooperatives run on a nonprofit basis. Because they exist to serve members rather than outside shareholders, credit unions generally offer lower loan rates and higher savings returns than traditional banks.1MyCreditUnion.gov. How Is a Credit Union Different Than a Bank? Any surplus flows back to members through reduced fees or better rates.
Investment banks sit on a different track. Instead of taking consumer deposits, they help corporations raise capital by underwriting stock and bond offerings and placing those securities with institutional buyers. They also advise on mergers, acquisitions, and corporate restructurings. Advisory fees in mid-market deals typically run between two and five percent of the transaction value, often on a sliding scale where the percentage decreases as deal size grows. Because these institutions move enormous sums, they face heavy federal oversight from the Securities and Exchange Commission and other regulators.
Commercial and Professional Intermediaries
Insurance brokers evaluate a client’s risk profile and shop across multiple carriers to find a suitable policy. Compensation usually comes as a commission built into the premium, commonly ten to twenty percent of the base premium. Some brokers charge a flat fee instead, which can offer more transparency because the client sees the cost up front and the broker has no incentive to steer toward a higher-premium product. Hybrid arrangements that blend both approaches are also common.
Real estate agents guide buyers and sellers through property transactions, handling everything from listing a home to managing the closing. Commissions historically ran around five to six percent of the sale price, split between the buyer’s and seller’s agents. That model changed significantly after a 2024 settlement by the National Association of Realtors. Offers of commission can no longer appear in the Multiple Listing Service, and buyers must sign a written agreement with their agent before touring properties. Which party pays which agent’s fee is now negotiated up front, meaning sellers may or may not agree to cover the buyer’s agent commission.2Bankrate. Real Estate Agent Fees and Commissions Federal law also restricts referral fees in real estate. Under the Real Estate Settlement Procedures Act, paying or receiving anything of value in exchange for referring settlement services on a federally related mortgage loan is illegal, with fines up to $10,000, up to one year in prison, and civil liability for three times the amount of the improper charge.3Office of the Law Revision Counsel. United States Code Title 12 – 2607 Prohibition Against Kickbacks and Unearned Fees
Freight forwarders and other supply chain facilitators move goods across borders, handling shipping logistics, customs clearance, and warehousing. Anyone acting as an ocean transportation intermediary in the United States must hold a license from the Federal Maritime Commission and maintain a surety bond, currently $50,000 for freight forwarders.4Office of the Law Revision Counsel. United States Code Title 46 – 40901 License Requirement The licensing and bonding exist because a forwarder that mishandles customs paperwork or cargo routing can expose a business to costly delays, seized shipments, or regulatory penalties.
Digital Platform Intermediaries
Online marketplaces and payment processors have become some of the most widely used intermediaries in daily life. When you buy something through an e-commerce platform, the platform hosts the listing, processes your payment, holds the funds until delivery is confirmed, and handles disputes if something goes wrong. Payment apps sit between your bank account and the recipient to move money without either side needing the other’s banking details.
Regulators increasingly apply the principle that the same activity should face the same regulation whether it runs through a traditional bank or a tech platform. In the United States, payment platforms that process transactions for sellers must issue Form 1099-K when payments exceed $20,000 across more than 200 transactions in a calendar year.5Internal Revenue Service. Understanding Your Form 1099-K Congress had previously attempted to lower this threshold to $600, but the limit has reverted to the original $20,000 and 200-transaction standard for 2025 and beyond. You owe tax on the income whether or not a 1099-K is issued; receiving one means the IRS already has the number and will be looking for it on your return.
What Duty Does an Intermediary Owe You?
The legal obligations an intermediary owes you depend on what kind of intermediary they are. The strongest standard is a full fiduciary duty, which requires the intermediary to act in your best interest at all times. Registered investment advisers owe this duty under the Investment Advisers Act of 1940. It covers the entire relationship, not just individual recommendations, and encompasses both a duty of care (giving sound advice) and a duty of loyalty (not putting their interests ahead of yours).
Broker-dealers face a different but related standard under SEC Regulation Best Interest, which took effect in 2020. Reg BI requires a broker-dealer to act in the retail customer’s best interest when making a recommendation, without placing the firm’s financial interests first. The rule has four components: a disclosure obligation covering material conflicts of interest, a care obligation requiring a reasonable basis for every recommendation, a conflict of interest obligation requiring policies to identify and mitigate conflicts, and a compliance obligation requiring enforcement of those policies.6U.S. Securities and Exchange Commission. Regulation Best Interest and the Investment Adviser Fiduciary Duty A key distinction: Reg BI applies at the moment of a recommendation, while an investment adviser’s fiduciary duty runs continuously. Reg BI also does not require ongoing monitoring of your account unless the broker specifically agreed to provide it.
FINRA layers additional rules on broker-dealers. Research analysts, for example, must disclose whether they hold a personal financial interest in a security they cover, whether the firm received investment banking compensation from the company, and whether the firm makes a market in that security.7Financial Industry Regulatory Authority. FINRA Rules – 2241 Research Analysts and Research Reports
Other intermediary categories carry their own duties. An escrow agent handling a real estate closing acts as a neutral fiduciary who holds the buyer’s funds and the seller’s documents, releasing them only when every condition in the purchase agreement has been met. The escrow agent acts only on written instructions and cannot advocate for either party. Insurance brokers, real estate agents, and freight forwarders operate under state licensing rules and the terms of their written client agreements rather than a uniform federal fiduciary standard.
Qualified Intermediaries in a 1031 Exchange
The word “intermediary” also carries a specialized meaning in real estate tax deferral, and it’s worth flagging because the rules are strict. Under Section 1031 of the Internal Revenue Code, you can defer capital gains tax when you exchange one investment property for another of like kind, but only if the exchange is structured through a qualified intermediary. The intermediary holds the sale proceeds from your relinquished property and uses them to acquire the replacement property on your behalf. You must identify the replacement property within 45 days of selling the old one, and the exchange must be completed within 180 days.8Office of the Law Revision Counsel. United States Code Title 26 – 1031 Exchange of Real Property Held for Productive Use or Investment
Since 2018, Section 1031 applies only to real property. Personal property, stocks, bonds, and partnership interests no longer qualify. The qualified intermediary also cannot be someone who has served as your agent, attorney, accountant, or broker within the previous two years. The independence requirement is the whole point: if you touch the proceeds yourself, the IRS treats the transaction as a sale rather than an exchange, and the tax deferral evaporates.
If Something Goes Wrong
When a financial intermediary mishandles your account or your money, the path to resolution depends on what you want. Filing a complaint with FINRA through its Investor Complaint Center triggers an investigation into the broker or firm’s conduct.9Financial Industry Regulatory Authority. Investor Contacts If FINRA finds a violation, its sanctions menu includes censure, fines, suspension, a permanent bar from the securities industry, and cease-and-desist orders.10Financial Industry Regulatory Authority. FINRA Rules – 8310 Sanctions for Violation of the Rules A regulatory complaint, though, doesn’t get you money back.
For monetary recovery, FINRA runs an arbitration process separate from the complaint system. Most brokerage account agreements include a mandatory arbitration clause, which means you likely agreed to resolve disputes through FINRA arbitration rather than in court when you opened your account. Arbitration tends to move faster than litigation, but the decision is generally final with very limited grounds for appeal. Criminal prosecution for fraud remains a separate possibility under federal securities law.