Today, the White House is encouraging the brokerage world to “act in the best interest of the client.” Which brings us to point out the difference between a brokerage firm and an advisory firm.
As investment advisors, we have an ongoing duty to act in our clients’ best interest, so this development from the White House is not news to our world. The investment advisor is always held to this fiduciary standard.
The big deal is to brokerage firms. They would have to disclose conflicts of interest and compensation, etc. Wall Street is expected to push back on this. Not sure why.
We invite you to look at the RIA stands for you website. This website does a good job in explaining the benefits of using a registered investment advisor.
You will also find a great reprint from the Wall Street Journal that outlines how to select a Registered Investment Advisory firm.
One of the reasons we love Apple? The Apple store. You walk in and immediately are met with a knowledgeable “Genius” who helps you navigate the myriad of products. Once you are custom fit into the right iPhone or MacBook Air, you are then handed off to the sales professionals who help you complete your purchase.
BMW is taking a page out of Steve Jobs’ book and implementing its own Genius program. Imagine walking into a dealership and engaging with a person whose compensation is not driven by the number of sales he makes, but by the knowledge he imparts to his client.
Sounds sort of like an RIA to us. Sounds like a genius idea.
A registered investment advisor (RIA) is a professional advisory firm that offers personalized financial advice to its clients, many of whom are affluent.
• Many independent RIAs work with complex portfolios and address unique needs that require a highly customized level of investment management strategy and consultation.
• Many independent RIAs are owned by the individual advisors who run them.
• Many independent RIAs provide advice and services for a fee based on a percentage of the client’s assets.
• RIA firms are registered with the Securities and Exchange Commission or state securities regulators, are subject to the Investment Advisers Act of 1940, and have a fiduciary duty to act in the best interest of their clients.
Why might an independent RIA be a good choice for an investor?
• Independent RIAs generally have affiliations with a variety of firms who assist with tax planning, estate planning, money management and more. These affiliations allow them to help their clients with complex financial needs.
• An independent RIA’s affiliations generally make available a wide universe of products and services to them, so that an RIA can tailor solutions to an individual client’s goals.
• Some independent RIA’s compensation is directly related to growing their clients’ assets, which can benefit both the advisor and client alike.