In situations where the RIA manages less than $100 million, the RIA must register with the state securities regulator. In order to register, potential RIAs must complete a document known as the Form ADV, which discloses the RIA’s background, qualifications, and investment strategies.

A Registered Investment Advisor (RIA) is typically a person or an organization registered with the Securities and Exchange Commission (SEC) or a state regulator to provide professional investment advice to individuals and institutions. Unlike broker-dealers, RIAs are bound by a fiduciary duty, meaning they must put the best interests of their clients first when offering investment advice. This often necessitates tailored advice to a particular individual’s personal financial situation, taking into account any risk tolerance, assets, and investment horizon, as well as any other specific goals. Without being a broker-dealer, the RIA will provide unbiased advice without any financial incentive for recommending a particular purchase or sale.

To become a RIA, the individual or organization must register by completing the Form ADV. This document discloses their personal and professional backgrounds, qualifications, and investment strategies. Thelevel of registration depends on the value of assets under the management of the RIA. If a RIA manages more than $100 million, they must register with the SEC. If the RIA manages less than $100 million, state securities regulators are responsible for registration of the RIA.

The income for an RIA is typically earned through management fees, which are calculated as a percentage of a client’s assets under management. Additionally, the RIA may charge advisory, consulting, or asset management fees, depending on the services they are providing. These fees must be disclosed within the Form ADV.

In general, RIAs are highly qualified, experienced professionals that provide specialized, personalized investment advice to their clients. By adhering to a fiduciary standard, RIAs are regularly held to the highest standards when offering advice to their clients. Unlike broker-dealers, they are not incentivized to make certain product recommendations, which greatly benefits their clients.