A (RIA) or Registered Investment Advisor is an investment adviser who is registered with the Federal Securities authorities or the Security division of a state.
The FIA is tested by FINRA. which is the new name for the Securities and Exchange regulatory overseeing body which means the Financial Industry Regulatory Authority. The test is a rigorous exam that the individual must pass in order to give people investment advice about the purchase of securities.
What is a Registered Investment Advisor?
The securities that are considered to be under the scrutiny of this designation would include stocks, bonds, mutual funds and exchange traded funds. It is not uncommon for an RIA to supervise and manage a portfolio of securities for individuals or companies. The payment to the RIA is generally made as percentage of the value of assets under management, an hourly fee, a fixed fee, or a commission on the securities that are sold by the RIA, assuming that the RIA is also a broker-dealer.
In April of 2004, Rule 204A was adopted which required Business Succession Planning to adhere to a code of ethics that would set out and enforce a code of ethics which would describe standards of conduct that would be expected of them in the public arena of advising clients in regard to investing.
The Fiduciary Obligations
The standards that are imposed must illustrate the fiduciary obligations and the compliance with the security laws as they pertain to their clients in regard to the FIA and any employees of the FIA.
More and more scrutiny is being placed upon the roles and the standards of FIAs so that customers and investors are aware of how their money is being invested and a revealing of all of the costs that go along with the transactions. The purpose of these rules is to make sure that customers and clients are treated fairly and individuals are treated impartially in all financial dealings.