What is a Registered Investment Advisor?

Nicole Madison
Nicole Madison

A registered investment advisor (RIA) is an individual, registered with the state or the Securities and Exchange Commission (SEC), who gives investment advice and manages investments for others. Typically, registered investment advisors who manage more than 25 million US dollars (USD) in investments are required to register with the SEC. Those managing less than that amount may be registered at the state level instead.

Investor should know their financial goals before meeting with an advisor.
Investor should know their financial goals before meeting with an advisor.

In the United States, there are specific rules and regulations for registered investment advisors. Registration is mandatory under the Investment Advisers Act of 1940. The SEC doesn’t charge fees for registering as an investment advisor. However, fees may be charged at the state level.

A registered investment advisor gives investment advice for a fee. An individual or firm in this position may also collect fees for managing investment portfolios and assisting in financial planning that includes investments. Sometimes, a client grants a registered investment advisor discretionary authority for the management of his or her investments. However, this is not a requirement.

A registered investment advisor has the task of determining the goals of his or her clients, as well as the amount of risk each client can tolerate. When a registered investment advisor is given discretionary authority, he is required to act for the best interest of his client. Assets managed by an RIA are typically invested carefully, as the advisor has a fiduciary relationship with his clients. A registered investment advisor also has the job of assessing returns and providing clients with quarterly results.

Before contacting a registered investment advisor, it is wise to carefully consider your needs and goals in advance. It’s a good idea to make a list of these goals to take along with you to initial meetings with potential advisors. By doing so, you better enable the registered investment advisor to understand your expectations and determine the best ways to meet them.

It is best to arrange a face-to-face meeting with potential RIAs before you hire one. This will enable you to choose one with whom you feel comfortable. It will also give you a chance to ask pertinent questions about the services provided, fees, and what you can expect from the advisor you choose. Don’t forget to ask questions about the credentials of any registered investment advisor you are considering.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a wiseGEEK writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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