What is an RIA – A Registered Investment Advisor

Are you thinking about opening an RIA but want to learn more about it before starting your financial journey? If yes, then you are here at the right place.

We are about to talk about everything related to RIA. First things first – let us talk about what an RIA is about.

RIA stands for Registered Investment Advisor, which is basically a company or an individual financial advisor that provides its clients with finance-related advice. The one thing that makes an RIA different from other financial advisors is that the RIA’s legal duty is to act in their client’s best interest.

Read on to learn more about RIA.

The Place of RIA in a Financial Advice Space

Since you are reading this, you are undoubtedly interested in getting answers to the question of How To Start an RIA; getting to the basics, you will want to know that as an RIA company, you will need to get registered with the federal or state regulatory agencies to be legally allowed to provide financial advice.

Typically, within a financial advice space, an RIA stands out for the following reasons:

Legal Duty – As an RIA, you carry the fiduciary duty to act in the best interests of your clients. In other words, you are financially and legally obliged to work in the best interest of your clients, along with offering the lowest-cost products that suit the needs of your clients.

Compared to an RIA, other financial advisors, including broker-dealers, only offer financial advice that is suitable for the time and space. This indicates that non-RIA financial advisors might provide financial advice that could meet their client’s needs but also enable them to earn more on sales commissions.

Unbeknownst to their clients, the non-RIA financial advisors could also charge higher fees and hence not always act in the best interests of their clients.

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Registry with the SEC – As an RIA, you are obliged to register with the SEC (Securities & Exchange Commission) or the state securities regulators.

By doing so, the general population will have the knowledge that you have their best interests in mind as the SEC and the state securities regulators ideally ensure that the RIAs serve their client’s best interests as trustees.

As RIAs are registered with the SEC or state securities regulators, it is easy for the public (your clients) to search for any potential complaints against the RIAs.

Encompass More than Financial Advice – At the end of the day, RIAs go above and beyond providing beneficial investment or financial advice. In other words, RIAs can advise their clients on a wide range of subjects that are connected to their finances, including advice on estate planning, retirement planning, and insurance.

RIAs are available in different forms and sizes, so you must be mindful of what kind of service(s) you want to provide for your clients. Your RIA could be a giant financial planning firm providing its services to a plethora of clients.

You could also be a single advisor RIA operating within the framework of your own system. In this case, you will have an ongoing relationship with your clients.

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