What is a Registered Investment Advisor (RIA)?

What’s up, everyone? If you’ve asked yourself, “What is an RIA?” or wondered how it applies to fund managers, then this is the article for you!

What is it?

An RIA (Registered Investment Advisor) is an individual advisor or firm/company that gives financial advice.

They have the fiduciary responsibility to act in the clients’ best interest.

This means that RIA individuals or firms will not take advantage of you but will give you the best advice they can.

RIAs are “registered” with the Securities and Exchange Commission (SEC). The SEC and state regulations ensure that RIAs fulfill their fiduciary duties.

How do RIAs Make Money?

Broker-Dealers make money from the fees they charge clients and can legally act in their own interest, putting the client’s funds at risk.

If RIAs are completely transparent with the client, how do they make money?

Investopedia lists the following as sources of income for RIAs…

  • Management fees (a fee that correlates with the investment performance, thus motivating the advisor)
  • Performance-based fees (the RIA can set a fee structure after a specific net worth is surpassed)
  • Asset-class-based fees (fees based on the asset class, for example, the RIA might charge a 1.5% fee on equities and 0.75% fee on stocks)
  • Hourly or flat fees (RIAs can charge by the hour or charge a flat right rate on a subscription basis)

Many RIAs collect fees based on how many assets they manage as a firm and how many assets they are managing for you.

Keep This in Mind While Choosing an RIA

It is always good to make sure the RIA is fee-based and is not getting paid on commission.

Before committing to an RIA, don’t hesitate to look at the details of their fee structure and make sure they’re the right fit for you.

SmartAsset.com suggests the following…

“If your assets are small and the fee percentage is too high, you may consider working with a robo-advisor first. Their rates can be as low as 0.25%.”


So, what is an RIA?

A Registered Investment Advisor is SEC-regulated financial advice that is guaranteed to be suited towards the clients’ best interest.

Hopefully, this information helps you learn the basics of managing a fund!

If you need help launching or scaling your own fund, visit Fund Launch!

That’s it for today!


Bridger Pennington

Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!

DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the author

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