What is an RIA (Registered Investment Advisor) – Why choose a fiduciary?

The RIA side

Regulated directly by the Securities and Exchange Commission (SEC), RIAs are considered to be acting in a fiduciary capacity, and so held to a higher standard of conduct than registered representatives. This fiduciary standard mandates that an RIA must always unconditionally put the client’s best interests ahead of his or her own, regardless of all other circumstances.

What Is a fiduciary?

A fiduciary is a person or organization that acts on behalf of another person or persons to manage assets. Essentially, a fiduciary owes to that other entity the duties of good faith and trust. The highest legal duty of one party to another, being a fiduciary requires being bound ethically to act in the other's best interests.

KEY TAKEAWAYS

  • Investors seeking an independent financial professional to help with advice and investments can choose between independent broker-dealers and registered investment advisors (RIAs).
  • Independent broker-dealers function as full-service brokerage firms but remain free from the constraints and demands of a large Wall Street company.
  • RIAs are independent fiduciaries who may associate with several broker-dealers, selling a range of products and services.