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Role of a Registered Investment Advisor

Engaging an independent fee-only RIA firm is a much different experience than investing with a brokerage or broker-dealer firm

What is a Registered Investment Advisor?

Registered Investment Advisors (RIAs) are professional independent advisory firms that provide personalized financial advice to their clients, many of whom have complex financial needs.

  • Because these advisors are independent, they are not tied to any particular family of funds or investment products.

  • Registered Investment Advisers (RIAs) usually provide their services for an annual fee calculated as a percentage of assets under management. They are required to act as "fiduciaries".

  • As fiduciaries, RIAs are held to the highest standard of care. This means they must put their clients' interests first. In other words, they must by law disclose all expenses and potential conflicts of interest.

  • RIAs are registered with either the Securities and Exchange Commission or state securities regulators.

How is an RIA different from a broker?

There is no requirement on the part of brokers and insurance agents to explain possible conflicts of interest that may arise between what is in their own personal best interest by offering a particular investment and the interest of the client who is being placed into the investment.

  • A broker’s primary loyalty is to their employer, the firm that pays them a salary each week along with various perks. An RIA’s primary loyalty is to their client, the person that pays them directly on an advisory fee basis.

  • When brokers and insurance agents give investment advice, they are obligated only to make sure that what they are recommending is "suitable" for the investor involved. This suitability standard represents a lower standard than the fiduciary standard, which RIAs are required to use by law.

Advisor or Adviser?

All three groups (RIAs, brokers and insurance agents) at times call themselves "advisers” or “advisors”.

  • Individual investors—even highly sophisticated ones—find it difficult to distinguish between and among these three groups of “advisors”. 

  • Critics say the current framework means brokers and insurance agents can recommend investments that enrich themselves and their companies at their clients' expense. These may include, for example, mutual funds or fixed-income products that result in higher commissions to the person selling them or hidden fees such as so-called 12(b)(1) marketing fees.

  • The Department of Labor has recently issued new regulations which aim to clarify the various roles and responsibilities of each of these three groups. The new regulations are to take effect in January 2018.

Role of a Registered Investment Advisor


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  • Client Login
  • Privacy Promise
  • Terms and Conditions
  • Contact Us
  • Home
  • Who We Are
    • Our Fiduciary Pledge
      • What is a Fiduciary?
      • Fiduciary Standard
    • Registered Investment Advisor
    • What to Expect as a Prospective Client
    • SEC Brochures
    • Benefits of Our Firm
  • What We Do
    • Client Services Overview
    • Wealth Management Process
    • Value Added Services
  • Our Fees
  • Essential Knowledge
    • Why Choose a Professional Wealth Advisor?
    • How to Choose the Right Fit
    • Know your investment objectives
    • Putting it All Together
    • Investment Terms
  • Newsletters