What is a Registered Investment Advisor (RIA)?

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Contributor, Benzinga
August 30, 2023

Is it a smart idea to buy mutual funds? What’s an exchange-traded fund (ETF)? How can you invest in the bond market? If you’re just getting started in investing, you probably have lots of questions about the equities you should invest in and how you can maximize your profits.

A registered investment adviser (RIA) is an investing expert who can help guide your investment strategy and help you minimize investment risk. But what exactly does an RIA do — and how much will an RIA cost you? Let’s take a closer look at what RIAs do and how they differ from other types of investment professionals.

What Does RIA Stand for?

RIA stands for registered investment adviser. The term RIA is a legal classification that specifically refers to an investment firm that’s registered with the U.S. Securities and Exchange Commission (SEC) or its state control board. A company cannot call itself an RIA if it isn’t registered with either the SEC or its state government.

Most RIAs are corporations or partnerships. To qualify for registration as an RIA, an investment advising firm must be headed by an investment adviser or a team of investment advisers who have passed FINRA’s minimum required RIA exams. This typically includes the Series 7 exam and either the Series 65 or Series 66 exam, tests on the basics of investing and the stock market. Passing these tests proves that the firm’s management knows enough about the investing landscape to offer reliable advice to its clientele.

What Does an RIA Do? 

An RIA may provide you with a wide range of investment advice and services. Some of the most commonly offered services include:

Asset Management

Your RIA will learn more about your unique financial situation and your investing goals. From there, you’ll hand over power of attorney to your RIA to buy, sell and trade assets like stocks, bonds and funds on your behalf. Your RIA may rebalance your portfolio throughout the year and send you regular reports on how your money is growing.

Retirement Planning

Will you have enough money to maintain your current lifestyle after you retire? An RIA can help you decide where to retire and how much you’ll need to save to maintain your current lifestyle.

Estate Planning

Your RIA can help you decide how to split your inheritance if you have multiple heirs. They can also help you minimize taxes.

Insurance Services

Some RIAs are also licensed to sell life insurance. The specific services you’ll have access to will depend on the RIA you choose.

RIA vs. Broker-Dealer 

Many investors confuse RIAs with broker-dealers. Broker-dealers and RIAs both buy and sell assets on your behalf but only RIAs are fiduciaries.

A fiduciary is an adviser legally obligated to act only in your best interests. When your RIA registers with the SEC or state board, it agrees to take steps to avoid financial conflicts of interest with clients. If an RIA fails to uphold its fiduciary standard, it may lose its designation.

Most RIAs accomplish this by charging you a flat-rate fee or an hourly fee for asset management services instead of accepting commissions on the sale of particular assets. This means that when you work with an RIA, you know for sure that the adviser recommending purchases and sales to you isn’t receiving a benefit from any outside company.

Broker-dealers, on the other hand, aren’t required to register with the SEC. This means they only need to meet a “suitability” standard instead of the full fiduciary standard. By the suitability standard, broker-dealers must recommend products and services that are suitable to your needs. Most broker-dealers make money on commission when they recommend particular purchases.

The suitability standard is much less strict than the fiduciary standard. If you want to make sure that you’re getting unbiased investment advice, it’s better to choose an RIA to manage your assets.

RIA vs. Financial Advisor 

The terms RIA and financial adviser also aren’t interchangeable. Let’s take a look at a few of the differences between an RIA and a financial adviser.

The term financial adviser is a catch-all term that refers to any individual who offers financial advice or services in exchange for a fee. A financial adviser might offer everything from asset management to general budgeting advice to insurance sales. Nearly any financial professional can call himself or herself a financial adviser. There’s no type of exam or registration required to advertise yourself as a financial adviser.

On the other hand, the term RIA is a legal classification. The only companies and advising firms that may call themselves RIAs are those who have completed the necessary FINRA exams and registered with the correct board of control. RIAs may offer a range of financial services, but they usually focus on asset management.

All RIAs may consider themselves financial advisers. However, every financial adviser isn’t an RIA.

How Much Do RIAs Cost?

Most RIAs charge clients a flat-rate annual percentage fee based on the dollar amount of assets you have under management. For example, if you have $100,000 of assets in your portfolio and your RIA charges a 2% annual fee, you’ll pay $2,000 for service each year. This fee helps the RIA avoid the inherent conflict of interest that comes with accepting commissions from outside companies.

Most RIAs charge between 1% and 2% of your total asset balance each year. If you have a higher total asset balance, you’ll pay a smaller percentage in annual fees. Many RIAs also charge an annual flat-rate fee in addition to your percentage fee. This flat-rate fee might fall between $2,500 and $7,500 annually, depending on the specific services you need.

How to Find an RIA 

With so many RIAs, how can you find the one that’s right for your needs? The key to choosing the right RIA is to work with an adviser whose investing strategy matches up with your goals.

Begin by checking out Benzinga’s list of the top investment advisers in the city closest to you. From Nashville, Tennessee to New York City, Benzinga has compiled a list of some of the largest RIAs in most major cities. Take a look at each adviser’s account minimums and investment strategies and schedule a consultation with one that fits your needs.

At your consultation, you should ask your investment adviser about his or her individual investing strategy, fee structure and services offered. Don’t be afraid to ask your adviser plenty of questions to make sure that you understand how your RIA will manage your money and your investments. Don’t feel 100% sure that the company you’re meeting with is right for you? Move on to another option.

You can also use SmartAsset's free tool to find three advisers in your area. You then have the freedom to choose whichever adviser is best for your situation.

Get an RIA for Your Team 

Whether you’re getting ready to start your journey toward retirement or you want to create a stream of passive income, an investment adviser can be an invaluable asset for future planning. But remember that every RIA doesn’t use the same investing strategy. Each RIA is as individual as the advisers and financial planners that make up the team. This factor makes it especially important to do your research and compare multiple RIAs before you choose the investing team that’s right for you.

Frequently Asked Questions


How do RIAs make money?


RIAs earn money through different fee structures, including asset-based fees, hourly fees, flat fees and commission fees. The revenue generated by RIAs depends on the value of the assets they manage and the services they offer to clients.


How do you register as an RIA?


To become an RIA, follow these steps: determine the regulatory jurisdiction, complete application forms including Form ADV, prepare supporting documents, submit the application, undergo a review process and once approved, provide investment advice legally.


Why is fiduciary responsibility important?


Fiduciary responsibility is important for individuals or entities managing someone else’s assets to act in their best interests. It promotes trust, protects rights and investments and prevents conflicts of interest and fraud in the financial industry. This duty maintains transparency and accountability and ensures the stability of the financial system.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.