Registered Investment Advisor
From Wikipedia, the free encyclopedia
Registered Investment Advisor (RIA) is a designation obtainable in the United States by an individual who has registered with the U.S. Securities and Exchange Commission or state regulatory agency (where the primary business is situated or multiple States in some cases) in connection with the management of the investments of others. In general RIAs managing assets totaling less than $25 million must register with each state in which they have more than 5 clients. Firms managing more assets can register nationally with the Securities and Exchange Commission. Registration can be a complex process, taking longer than a month and costing several hundred dollars in filing fees, depending on the state or SEC. Registration requires that all employees of the RIA (except those limited to clerical duties) pass the NASD Series 65 exam or have completed an approved professional designation.
Registration does, however, cause one to become legally responsible for the investment advice given[citation needed]; requiring one to keep longer, more accurate records of the financial advice given to clients.
Release 34-51523 determined that Broker-Dealers are "not to be deemed investment advisors." Due to the liability associated with being a Registered Investment Advisor, many larger brokerage firms (such as Merrill Lynch and UBS, have discontinued their usual habit of providing financial advisement services, rather than register their broker-dealers as they would otherwise be required to do in accordance with recent changes in investment law. (As revealed in the article "False Fiduciaries" by Bob Veres, found in the May 2006 issue of Financial Planning.)
Brokerages which do not register their representatives as RIA's are therefore required to have statements on all of their new account forms which essentially explain that their interests are not necessarily the same as their client's best interests, and they may also be compensated from the owners of the investment products they are selling. This is because unlike an attorney or Certified Public Accountant, a non-registered representative does not have a fiduciary relationship with the client.[citation needed]
