Registered Investment Advisor
Registered Investment Advisor
A Registered Investment Advisor (RIA) is a firm or individual that provides investment advice or manages investment portfolios for cLients and is registered with the Securities and Exchange Commission (SEC) or state regulators. RIAs have a fiduciary duty to act in their cLients’ best interests, meaning they must prioritize their cLients’ needs above their own.
RIAs are typically compensated through fees, which may be based on a percentage of Assets under management (AUM), hourly rates, or fixed fees, rather than through commissions from the sale of financial products.
Examples and Cases
- Example 1: A Financial Advisor who manages $100 million in cLient Assets and charges a 1% annual fee is an RIA. They must register with the SEC because they manage Assets over $110 million.
- Example 2: A small-town investment firm offering financial planning services and managing cLient investments below the SEC threshold may register with the state authorities as an RIA.
- Case: In 2020, the SEC charged an RIA for failing to disclose conflicts of interest related to its investment recommendations, highlighting the importance of transparency and fiduciary duty.