When searching for an investment advisor, it’s easy to get bogged down in the jargon related to various financial professionals.

However, when seeking someone to assist you with investment management, it’s worth putting in the time and effort to research the options available to you. After all, your present and future wealth is on the line.

You need to figure out your financial goals and time horizon, then find an advisor who complements achieving those goals. In some cases, you’ll want to work with a Registered Investment Advisor (RIA) to pursue quality advice and a fair price.

What is a Registered Investment Advisor?

The term ‘Registered Investment Advisor’ (RIA) does not refer to a single person, like a Certified Public Accountant (CPA). An RIA is a firm providing investment directives and managing client assets. An RIA could be a single-person office, but it’s a designation for the business, not an individual title. RIAs must be registered either with their state government or with the SEC if they control more than $100M in assets.

An investment advisor who works for an RIA is known as an Investment Advisor Representative (IAR). To become an IAR, an individual must complete the Series 65 exam (or Series 7 and Series 66).

Advisors at RIA firms usually perform one of two roles: they either recommend securities for clients to invest in or outright manage client portfolios, trading securities on behalf of their client. 

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How do RIAs and IARs differ from financial planners and financial planning firms?

Although IARs and financial planners are both professionals who work in the financial services industry, comparing the two is a bit like comparing apples and oranges.

Financial planners may provide a variety of services to their clients, including estate planning, retirement planning, college planning, tax planning, and (if they are a financial planner and an IAR) investment planning or investment management.

Importantly, financial planners are not regulated as financial planners. However, they may be regulated for the individual services they offer. For example, if they offer tax preparation services, then they will need to be authorized by the IRS to do so. If they are an IAR, they will be subject to either state or federal government (Securities and Exchange Commission (SEC) oversight.

Some IARs will only provide investment advice or investment management services. However, many operate as IARs in addition to operating as wealth managers”, “financial advisors”, “financial planners,” or the all inclusive “financial professionals.” In this way, they expand their services, sometimes providing “one-stop-shops,” or firms where clients can meet the majority of their financial needs all in the same place.

I know, the above titles are confusing. The financial industry is a mess with all of the titles that don’t tell you anything. It is not a wonder why the public does not trust the financial services industry. I am glad that I am also a CPA. I felt it lended credibility to being a “financial professional.”

To decipher the word-salad of credentials, choose a financial planner that has a specific credential such as CFP® and is regulated by a government agency. You can also learn more about this topic in our article Financial Advisor vs. Investment Advisor.

RIAs vs Registered Representatives

Registered representatives work directly for a broker-dealer, which can be a large Wall Street firm like Morgan Stanley, Merrill Lynch, Ameriprise, etc. or it can be a smaller, independent firm. A portion-  or sometimes the majority – of a registered representative’s income comes from commissions.

Unlike registered representatives, RIAs and IARs must adhere to a fiduciary standard. This means they are required to act in the best interest of the client and disclose any potential conflicts of interest. Additionally, their compensation is fee-based.

An RIA will also have Form ADV on hand with the SEC, which is publicly available. Form ADV discloses to investors the assets under management at a firm, any previous disciplinary action that has been taken against the firm, and much, much more. With an RIA, you’ll be able to do a significant amount of research into the firm before ever stepping foot through the door.

Benefits of Working with an RIA

●      Transparency – There are no black boxes when it comes to working with an RIA. You can access publicly available reports detailing the assets under management at a firm, any previous disciplinary action that has been taken against the firm, and much, much more.

●      Aligned Incentives – The fiduciary standard is strictly enforced among RIAs and violations aren’t just punished with a slap on the wrist. A client working with an RIA can sleep easy knowing their advisor is only recommending the best of the best.

●      Simple Payment Structure – RIAs earn income from fees, not commissions. Some may charge an annual fee or a percentage of assets under management, but you’ll have a clear understanding upfront about the price of working with the firm. Because their compensation comes directly from you, there’s an added incentive to provide good service. A word of caution, though: if a representative at an RIA is interacting with you in a capacity outside of investment advisor (e.g. Registered Representative of a broker-dealer), they can charge commissions. Look for a firm that is fee-only.

●      Personalized Service – RIAs are typically smaller enterprises that provide a more personal touch and holistic services than broker-dealers.

Financial Planning and Investment Management at Bartley Financial

Bartley Financial is built around a client-first ethos. We are as committed to exhibiting high levels of professionalism as we are to building relationships with clients built on trust and mutual respect. That’s why we only offer a transparent, fee-only compensation structure, so that our clients never need to be concerned about a conflict of interest.

Bartley Financial has an experienced team of CPAs and CFPs® that help clients manage their investment portfolios, plan for retirement, strategize taxes, or execute any other initiatives in pursuit of optimum financial health and minimal financial stress.

We are experienced and dedicated financial planners and investment advisors. We have experience creating comprehensive strategies to ensure that your wealth is being leveraged to move your goals closer. We execute a core and explore investment strategy that will optimize your ability to meet your goals and live the life you desire. We will start by crystallizing your goals, in order to “Begin With the End in Mind.”

Contact us today to begin a relationship with a team of knowledgeable, trustworthy professionals who put their clients first.