Facebook Twitter LinkedIn
Register for our daily updates!

Featured Advisor

Asset Preservation Advisors


State: GA

APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

Click to see the full profile

Share |

What is a Registered Investment Advisor?

What does it mean to be a “registered investment advisor”? Does a registered investment advisor have a place on your financial team?

| BY Adriana Reyneri

A full-service broker remains the most common type of advisor used by Millionaire investors, but a small share of wealthy Americans prefer the services of a registered investment advisor.

Assets overseen by a registered investment advisor have grown rapidly over the past tumultuous decade. According to RIA Central, roughly 29,000 RIAs managed $34 trillion in assets at the end of 2011. What is a registered investment advisor? Does a registered investment advisor or RIA have a place on your financial team?

An investment advisor must register with the U.S. Securities and Exchange Commission when managing more than $100 million in assets. Investment advisors managing less than that amount are required to register with state regulatory agencies.  A registered investment advisor is held to a high “fiduciary standard,” which requires the advisor to put the financial interests of clients foremost.  (To learn more about the fiduciary duty of a registered investment advisor click here.)

A registered investment advisor provides advice regarding securities in return for compensation, according to RIA Compliance Consultants, and is typically compensated through fees. (For more information about different ways that an advisor’s compensation can be structured, click here.)

As part of the registration process, a registered investment advisor must file a Form ADV, which, among other things, provides important information to prospective clients. According to RIA Compliance Consultants, the Form ADV discloses the services provided by a registered investment advisor, as well as associated fees and any third-party compensation. Investors can also use the Form ADV to research the personal background of the registered investment advisor, any potential conflicts of interest and the firm’s code of ethics. A registered investment advisor is required to update the Form ADV every year, and to offer the information to clients.

What other criteria do Millionaire investors consider when selecting a financial advisor? Trustworthiness is paramount, whether investors prefer a broker-dealer or registered investment advisor.