Getting the right financial advice is a critical part of ensuring the money you invest brings the returns you expect. In fact, it can decide whether you achieve your financial goals and even if you set the right financial goals, to begin with.
And because of that, more and more people are opting for RIA firms such as Cresset Capital. In fact, even the most reliable magazine Barrons ranks Cresset in the top 100 advisors in the financial space, and their status as an RIA plays a big role in the ability to provide clients with outstanding results.
But how does an RIA firm differ from other types of financial advisors? And how exactly does it operate?
To help you better understand the underlying principles of working with an RIA firm, let’s look at its definition and what they do below.
What Is an RIA Firm?
RIA stands for Registered Investment Advisor, and the name hints at a key difference that separates RIA firms from other types of financial advice services providers. In order to become an RIA firm, an individual or a company must register with either the U.S SEC (Securities and Exchange Commission) or with the state equivalents of securities administrators.
And that added layer of security provided by being regulated by government agencies is what appeals to many investors looking for professional advice that will represent their best interests in every situation.
A Registered Investment Advisor (RIA) has a clearly-defined fiduciary duty to their clients, which means they need to put your interests first, above their own or anyone else’s. In other words, they must think of providing you with the best value and lowest cost financial products no matter how that would impact their commissions or other forms of compensation.
They must also advise you on your investment strategy with no hidden bias, providing you with the options that would serve your needs and goals, and can only earn revenue through a fee based on the percentage of the assets that are managed. That’s in contrast to non-RIA financial advisors who can also earn various commissions and fees, which might sometimes create conflicts of interest and impact the advice that they end up giving.
And because RIAs are bound by law to put the interests of the client above all else, they are also a great source of sound financial advice about not just specific investments but a broader strategy and goals that can have a huge impact on the types of outcomes you prioritize in your investments. Having someone on your side who has your best interest at heart is an essential aspect of maximizing your chances of long-term success.
And the best thing about RIAs is that they come in a variety of sizes and offer services to different types of clients. For some, an RIA could be a single financial advisor who helps them navigate the complexities of investing. For others, the RIA could be a huge financial firm that has thousands of employees and a global presence. The biggest common feature of all RIAs is not their size but rather their fiduciary duty to clients, which is why so many people end up choosing these types of financial advisors over others.
What Do RIA Firms Do?
To better understand if an RIA firm is right for you, it’s important to clearly define how they function and what they do. And an important thing to understand is that some of the preconceptions about what RIA is might not be entirely accurate.
For instance, for a long time, RIAs were primarily associated with catering to the wealthy. But while that was true for a while, today many RIA firms cater to a variety of clients, from the very wealthy to beginning investors trying to begin their journey of amassing wealth.
In fact, one of the biggest advantages of using RIA services is their ability to offer unbiased personalized advice that can result in the best outcomes in your unique situation, according to the goals that make the most sense right now.
Most financial advisors should be able to provide you with more general advice based on the best practices of investing, but only an RIA firm will have the time and capacity to get to know your situation and provide you with advice that is aligned with your best interests.
Bottom Line
RIA firms are becoming an increasingly popular option for those seeking to make better decisions about their financial future.
And the best news is that today, RIA firms are becoming more accessible to investors at all levels, from beginners to those who have already amassed significant wealth.
