Registered Investment Adviser (RIA)
A firm registered to give advice for a fee, holding fiduciary duty.
What is Registered Investment Adviser (RIA)?
Registers with the SEC (generally $100M+ in assets under management) or with state regulators below that. Files Form ADV, is compensated by fees rather than commissions, and owes clients a fiduciary duty at all times.
Registered Investment Adviser (RIA): a worked example
A firm charging 1% of AUM annually rather than earning product commissions.
More terms in Regulation & Professional Duty
Fiduciary Duty
A legal obligation to act in the client's best interest.
Suitability Standard
A recommendation must be appropriate given the client's profile.
Regulation Best Interest (Reg BI)
SEC rule requiring broker-dealers to act in a retail client's best interest.
Broker-Dealer
A firm that executes trades as agent (broker) or principal (dealer).
FINRA
The self-regulatory organization overseeing broker-dealers.
Securities and Exchange Commission (SEC)
The federal agency regulating securities markets.
SIPC
Insurance against broker failure - not against investment losses.
Securities Act of 1933
The 'truth in securities' law governing new issues.