What’s an RIA?
An RIA is a registered investment advisor. RIAs are firms, registered with states or the SEC (security exchange commission) to provide investment advice as a fiduciary. A fiduciary is a legal obligation to provide trusted advice that is in the best interest of the client. The RIA channel includes asset managers, wealth managers, financial advisors, consultants, tax professionals, traders, custodians, brokers, agencies hedge funds, mutual funds, ETF issuers, financial planners and retirement specialists. It is a vast collective of financial firms that provide financial advice to all kinds of clients including individuals, corporations, institutions, charities, and other advisors. The key element of RIA firms is that they are usually, completely independent, meaning that they are ultimately responsible when things go wrong with client relationships, performance and financial planning. Different from a broker, RIAs determine product suitability and typically charge fees based on assets managed versus commissions. Some RIAs charge commissions on trades, but in order to do so, they must be affiliated with a broker/dealer. Such RIAs are considered “hybrid” RIAs, and the financial advisor working a the RIA firm that collects the commission, would have to be registered as an “IAR” or investment adviser representative to the RIA on behalf of their broker/dealer. IARs are licensed with FINRA, which is a self-regulatory organization and is completely separate from the SEC. Broker/dealer firms are registered with FINRA and the SEC, all brokers are registered with FINRA and some brokers are also IARs working with an SEC registered RIA firm. There are approximately 34,000 RIA firms globally. A complete database of RIA firms can be found here: http://www.RIADatabase.com.
The SEC regulates RIAs, and provides disclosure information on their website: http://www.sec.gov. Information about regulatory, criminal and civil charges against an RIA firm and its affiliate IARs or other employees can be found on the firm’s Part I and Part II ADV filings. These filings are typically updated annually, on a firm’s fiscal year. However, firms often update their ADV filings when assets under management change significantly, or if they have other major changes.
RIA Database provides searchable ADV filings, historical asset information, and text-based brochure searches. RIA firms with assets greater than $100 million additional file 13F reports. The 13F filings are a report of holding data including ETFs (exchange traded funds), ETNs (exchange traded notes), equities (stocks), and CEFs (closed end funds). RIA Database tracks 13F data by RIA firm as well.