Investment Advice: The Benefits of Working with a Registered Investment Advisor
Whether you are a high-net-worth individual or a mid-size institution, it can be difficult to develop an investment strategy and oversee your investments – especially as your portfolio grows and becomes more diverse. Because of this, many people seek investment advice through a third party. Not all advisors are equal, though, when it comes to guiding customers through their unique financial, estate, and investment planning. If you are looking for sound investment advice, consider a company that has a fiduciary duty to put your interests first: a Registered Investment Advisor.
What is a Registered Investment Advisor?
A Registered Investment Advisor – or RIA – is a firm who manages assets and provides investment advice. While many people believe that an RIA is an individual, it is actually a classification for businesses. An RIA firm houses investment advisors. These advisors may have designations such as Certified Financial Planner® (CFP®), Chartered Financial Analyst (CFA), or Personal Financial Specialist (PFS) based upon each individual’s personal training and certifications.
Five RIA Benefits
While every person or organization has different needs, RIAs offer some advantages that brokers do not.
In general, RIAs:
- File Form ADV with the U.S. Securities and Exchange Commission (SEC). Form ADV can give you a comprehensive view of how the investment advisor runs its business. It details ownership, clients, employees, and any disciplinary filings against the firm itself or its employees. The form also contains a brochure that lays out information like fee schedules, conflicts of interest, areas where the advisor may receive a commission (such as from the sale of insurance), and the educational and business backgrounds of key personnel within the firm.
- Have a fiduciary duty to work on your behalf. According to the SEC, an investment advisor has a “fundamental obligation” to act in the best interests of its clients. An RIA must operate in good faith and make recommendations based on the needs of its customers – not its bank account. Part of this benefit resides in the fact that clients can have a direct line of communication with their investment advisors when working with an RIA; conversely, there is no way to ask a mutual fund manager why they’ve made a particular investment choice.
- Are free to provide independent guidance. RIAs are not tied to a particular company or product. They can offer unbiased advice and tailor your investment portfolio to your unique needs. Most RIAs do work with third-party custodians, though, adding value to the RIA experience. Custodians are typically larger banks or broker-dealers that offer additional customer service, reporting, and account management benefits.
- Supply fee-based service. Unlike brokerage firms, most RIAs are fee-based, offering investment advice based on a set percentage of their client’s total assets. They do not make money on the sale or purchase of securities; the only way fee-based RIAs can make money is to increase the value of your portfolio.
- Have a helpful, professional network. Investment advisors at RIA firms often have networks of Certified Public Accountants (CPAs), estate planners, and insurance agents who can help you protect and preserve your wealth. These experts can work hand-in-hand with your advisor to develop an investment strategy that takes things like taxes and asset distribution after death into consideration.
Finding the Right Financial Advisor for Your Needs
Managing a complex portfolio of stocks, bonds, and mutual funds may seem straightforward to some people, but for others, it can feel overwhelming. It’s important to remember that you don’t have to tackle everything – like saving for college and retirement – alone. If you feel like you need a professional investment advice, an RIA, like Partnership Wealth Management, may be right for you.
If you have any questions, feel free to give us a call!
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. This information is not intended to be a substitute for specific, individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them make the most of their investments. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started: www.partnershipwm.com.