What Is a Registered Investment Advisor?

By Sam Swenson, CFA, CPA – Updated Nov 19, 2024 at 10:45 AM

Key Points

RIAs must prioritize client interests due to a fiduciary standard, unlike broker-dealers.
RIAs can register with the SEC if managing over $25M, mandatory at $100M.
RIAs offer varied billing, including asset-based fees or hourly rates.

A registered investment advisor -- sometimes abbreviated as “RIA” -- is a firm qualified to dispense financial advice and/or manage money for clients. The main difference between an RIA and a broker-dealer is that an RIA is bound by a fiduciary standard; in other words, an RIA must always place the interests of its clients ahead of its own interests.

RIAs are registered with the Securities and Exchange Commission (SEC) or state securities administrators, depending on their asset levels. Some RIAs don’t manage money at all, however, but may provide services to clients on an hourly or retainer basis.

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Businessperson giving advice to two clients. — Source: Getty Images

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The responsibilities of an RIA generally include broad financial planning, retirement planning, estate, and trust advice, wealth and investment management, and even more basic activities like budgeting and debt management. RIAs also bill clients in a variety of ways, including by asset level (if the RIA manages the client’s portfolio) and/or hourly (if the client is comfortable managing their own money).

Above all, while broker-dealers have to follow only a baseline suitability standard, RIAs are committed to a higher fiduciary standard that tends to work in clients’ favor.

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