Who is a Registered Investment Adviser (RIA)

Updated: Jul 28, 2020

For a common investor, it is sometimes hard to distinguish between the terms like a registered investment adviser (RIA), financial advisor, financial planner, or wealth manager, etc. In this article, we will explain how a registered investment adviser, is different from other advisers or consultants.

Being structures as RIA means being completely independent and objective when making an investment or financial planning recommendations to our clients. RIA is paid directly by clients on a fee-only basis and receives no commissions. RIA is not compelled, nor do they benefit from any transaction-based compensation.

The goal of RIA is to develop personal relationships with clients and help them find solutions that are aligned with their needs and objectives. RIA does not owe allegiance to any particular brokerage firm, financial product, fund family, or investment. RIA has the freedom to make unbiased, prudent investment decisions for our clients.

Things to remember:

  • RIAs have a fiduciary duty to act in the best interest of their clients.

  • RIAs use institutional custodians (like Charles Schwab) to hold and safeguard their clients’ investments.

  • Most independent RIAs are owned by the individual advisors who run them.

  • Many independent RIAs provide advice and services for a fee, based on a percentage of the client’s assets.

  • RIA firms are registered with the Securities and Exchange Commission and are subject to the Investment Advisers Act of 1940, making RIAs some of the most highly regulated entities in the financial industry.

  • RIAs work with complex portfolios and address unique needs that require a highly customized level of investment expertise.

  • Generally, RIAs have relationships with a variety of firms that assist with tax planning, estate planning, insurance needs, and more. These affiliations allow us to help our clients with complex financial needs.

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