Registered Investment Advisor

A registered investment advisor is a professional advisor who who has been registered with the Securities and Exchange Commission and manages the investments of other people dynamically.

Note that registration does not necessarily mean that the advisor has been recommended by the SEC. What it means is that the SEC has the authority to regulate these investment advisors who are registered with them. The basic idea is that all those RIAs who manage less than $25 million are to be registered at the state level but those who are managing more than this amount have to get registered with the SEC.

Profile of a Financial Advisor

A financial advisor is a person who manages the investment portfolio of the investors and advises a person how to manage their portfolios. They usually demand a certain amount of fee for the services that they provide. They receive a fixed percentage of the managed assets of the investors.

Benefit of an Advisor

The benefit of an advisor is that no matter whether the customer is active or not, they retain the normal advisory fee. However, it is advisable for an investor to be careful while choosing a financial advisor. The registered investment advisors have the fiduciary responsibility towards the client and hence they have to act in the client's favor. Due to this reason, they are held at much higher legal pedestal as compared to insurance agents and stockbrokers.

U.S. Laws for Registered Investment Advisors

The United States government passed specific rules for registered investment advisors and made registration mandatory under the Investment Advisors Act of 1940. However, a person does not have to pay any kind of fees for getting registered with the SEC as an investment advisor. Still, if one gets registered at the state level then a small amount is charged as fees. The registered advisors cannot earn any commission on the investment that makes them more reliable for the client.

Task of an Investment Advisor

The main task of a registered investment advisor is to determine the goals of the client and to evaluate the risk a particular client can tolerate. Sometimes the clients may give discretionary authority to their financial advisor. In such instances, the registered investment advisor is supposed to act in the best of client's interest. Another aspect which is a part of an advisors job is to assess returns and provide the client with quarterly results.

Before you contact a registered investment advisor, note down your goals and requirements, discuss this list with your advisor and sort down your related queries.

Setting your expectations clearly is a great a way to begin your interaction with your advisor. This way, you can plan out the best strategy to fulfill them!