The Importance Of RIA

An RIA, otherwise known as a Registered Investment Advisor, is a person or company that acts as a fiduciary while providing financial advisement or while managing a financial portfolio. An RIA must be licensed and registered with the Securities and Exchange Commission and, when applicable, also their state of practice (Investopedia). Broken down into layman’s terms, a Registered Investment Advisor is truly just a certifiably educated advisor whose job is to act in their client’s best interest when making financial decisions or giving financial advice pertaining to their client’s investment portfolios. RIA’s work with high-net worth clients, typically interested in investing over a million dollars, and have authorization to invest and make trades on their client’s behalf. They are fee-based, instead of commission based, which helps to keep the client’s best interests at hand during the decision making process (Barnes).

One of which may be “who do I trust with my money?”. An RIA is a suitable option because they act as fiduciaries. There is a much smaller chance of them hiding fees or advising against the best interest of their client (Nerdwallet). The caveat to having an RIA, is they tend to focus on obtaining high net worth clientele. With the lack of commission based income, RIA’s have somewhat of a ceiling on their salary. Their income is largely based off of the amount their clients invest; they make more when their clients invest more (Barnes). Therefore, if a potential client has a less than desirable portfolio, they may find it harder to find representation from an RIA or another fiduciary. Also, RIAs are more interested in maintaining and conservatively growing their client’s portfolios so a low net worth client wouldn’t benefit much from investing through and