Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Registered Investment Advisor

What it is:

A Registered Investment Advisor (or RIA) is an investment manager who is registered with the Securities Exchange Commission (SEC) and who must comply with SEC regulations.

How it works (Example):

An investment manager who is a RIA has not necessarily completed a level of education that qualifies him or her to provide a higher level of service. The RIA designation simply means that an investment manager is registered with the SEC and must comply with specific regulations regarding any action taken on the assets he or she manages. Registration with the SEC is compulsory once someone is managing in excess of a certain amount in assets ($25 million and above). And annually, they must register with their local state authorities as well as disclose to the SEC their standing with regard to the assets they manage.

To illustrate, suppose Bob is an investment manager who is a RIA. This does not certify him as an effective advisor; however it should reassure his clients that he must comply with SEC regulations and should, therefore, hold higher ethical and professional standards.
 

Why it Matters:

The RIA, though not a designation, forces those who manage several million dollars in others' assets to comply lawfully with SEC regulations. This protects an RIA's clients and gives them peace of mind knowing that the individual managing their assets must be SEC-compliant.

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