What is an RIA

The financial services industry is a rapidly changing professional environment. As the needs and desires of investors change, and the regulation of the financial services industry shifts toward adding more regulation designed to increase transparency, firms engaged in managing assets are also evolving.A registered investment advisor (RIA) is a firm that is provides wealth management and investment advice for a fee. RIAs, like Apex Financial Advisors, register with the Securities and Exchange Commission (SEC) and any states in which they operate.

State of the Industry

There has been a mass exodus of clients leaving the large broker-dealers over the past several years. There are several reasons for this change including very high commission fees, the lack of transparency, conflicts of interest, inadequate diversification and the refusal of the broker-dealers to accept the fiduciary standard. This is where RIAs are able to provide additional services that broker-dealers do not, such as:

  • Financial Strategist: Many clients are looking for advice from someone who truly oversees their total financial picture. A good RIA will speak to the client in terms of his or her overall goals and objectives, and review these with the client at regular intervals.
  • Investment Recommendations: Broker-dealers are limited to offering clients investment products that are part of their own “wrap-fee programs,” whereas RIAs are free to utilize many custodians and investment vehicles that are best suited for clients.
  • Tax Planning: Most Americans who participate in the stock market do so through mutual funds, which offer no personal tax considerations to any one holder of mutual fund shares. For a wealthy investor, there are simply too many dollars at stake for taxes to not be taken into account.
  • Fiduciary Standard: As required under the U.S. Investment Advisers Act of 1940, Registered Investment Advisors must act and serve in the client’s best interests, with the intent to eliminate, or at least to expose, all potential conflicts of interest. This is such an important distinction, that a study conducted by the SEC recently recommended that a uniform fiduciary standard of conduct currently applied to RIAs be applied to broker-dealers as well.

What Does an RIA Do?

RIA AdvantagesFee-only RIAs provide investment advice for clients and earn their revenue through a management fee comprised of a percentage of assets held for a client. Some RIAs, like Apex Financial Advisors, offer comprehensive financial planning along with investment advice for this fee. RIA Firms who structure their compensation this way do so to align the best interests of the client with those of the RIA and to avoid conflicts of interest that are inherent within the broker-dealers. Where oftentimes financial advisors at broker-dealers receive incentives and commissions to invest their clients’ assets in a particular brand of mutual fund or annuity, fee-only RIAs do not receive these incentives or commissions from outside investment companies. RIAs are not limited in their investment choices for their clients. Where broker-dealers oftentimes limit investment choices based on the incentives and commissions they receive from the investment companies, fee-only RIAs have the freedom to utilize investments that best suit their clients’ need.


If you are looking for a Registered Investment Advisor, look no further than Apex Financial Advisors. Please reach out today with any questions.

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax and/or legal advice regarding your individual situation from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.