The Different Options:
Registered
Investment
Advisor (RIA)
Registered Representative (stockbroker)

There are important differences between Independent Registered Investment Advisors and Registered Representatives. Make sure you understand what they are.


Independent RIA:
  • In the business of giving advice
  • Independent: RIA firm typically not owned by another
  • Fiduciary: legally required to put clients' interests first (a higher standard than suitability)
  • Typically fee-based compensation for advice (asset-based or performance-based)
  • Regulated by the SEC or states (as applicable)
Registered Representative(Stockbroker):
  • Brokerage firm primarily in the business of buying and selling securities
  • Registered Representative typically an employee/contractor of brokerage firm
  • Typically compensated by commissions on product transactions
  • Held to suitability standards, not fiduciary standards
  • Often "look like" an advisor in marketing collateral and Web sites
  • Regulated primarily by FINRA (a self-regulatory organization)
Questions you should ask yourself:
  • What am I looking for — assistance with buying/selling securities, investment advice, or both?
  • How do I want to pay my financial professional? Fees? Commissions?
  • How important is it that my financial professional have a fiduciary responsibility to put my interests first?
Make sure you read the fine print!