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“A Registered Investment Advisor (R.I.A) is a person or firm who advices to individuals on investments and manages their portfolios. R.I.A (s) have afiduciary duty to their clients, which means they have a fundamental obligation to provide investment advice that always acts in their clients’ best interests.”
Registered Investment Advisor individuals or firms receive compensation in the form of fees for providing financial advice and investment management. They are required to act as a fiduciary by the licensing regulator.
This is very different from broker-dealers (like insurance, mutual fund and brokerage firms) and their representatives, who provide recommendations for a commission. Broker-dealers and their representatives are not required to act as a fiduciary, they tend to make recommendations based on their sales strategy and commission percentage.
R.I.A and Broker-dealers are two different standards of care, but most consumers are unaware of the difference, as any of these professionals may call themselves as a financial advisor.
Did you know?
There are only around 1,200 Registered Investment Advisors (RIAs) in India reachable by the population of 133.92 crores (2017).
However, there are more than 30,00,000 brokers (other financial advisors) in India selling Financial Products in return of commission.
Whereas, statistics shows the number of Registered Investment Advisors (RIAs) in the United States were 12,578 as of July 2018 reachable to the population of 32.57 crores.