{"id":3709,"date":"2014-04-09T06:15:57","date_gmt":"2014-04-09T13:15:57","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=3709"},"modified":"2015-11-03T15:59:11","modified_gmt":"2015-11-03T23:59:11","slug":"using-registered-investment-advisor-best-interest","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/advisors\/using-registered-investment-advisor-best-interest\/","title":{"rendered":"Why Using a Registered Investment Advisor is in Your Best Interest"},"content":{"rendered":"

Typically, it is not too hard to find an advisor willing to give you investment advice.\u00a0\u00a0 But, when it comes to the standard of care for clients, are all investment advisors equal?\u00a0 In short, the answer is no.<\/p>\n

What is a Registered Investment Advisor (RIA)?<\/b><\/p>\n

Registered Investment Advisors (RIAs) are investment advisory firms that must register with, and agree to be regu\u00adlated by, the U.S. Securities & Exchange Commission<\/a> or, in the case of RIAs with less than $100 million in assets under management, state securities regulators.<\/p>\n

Most RIAs cater to high-net-worth individuals, family offices and retire\u00adment plans. \u00a0Many RIAs are formed by former employees of large banks and brokerage firms. The allure of these investment professionals is the opportunity to leave corporate America for the freedom and flexibility to set up smaller, independent businesses where they could more closely align their services with their cli\u00adents\u2019 needs.<\/p>\n

A Registered Investment Advisor must operate under and adhere to a fiduciary<\/i> standard of care. \u00a0This standard requires RIAs to act in a manner that is always<\/i> in the client\u2019s best interest. \u00a0\u00a0In fact, RIAs are legally obligated to act in their clients\u2019 best interests, even if that runs counter to the firm\u2019s own interests. \u00a0In addition, every RIA must disclose all forms of compensation and any conflicts of interest in writing.<\/p>\n

While other types of advisors may choose to adhere to similar standards, or say<\/i> that they do, RIAs remain the only advisors that are legally obligated to do so.<\/p>\n

The Fiduciary Standard<\/b><\/p>\n

In June 2009, the Committee for the Fiduciary Standard <\/i><\/a>was formed to define the \u201cfiduciary standard.\u201d This group of investment professionals and fiduciary experts advocated that all investment and financial advice be rendered as fiduciary<\/i> advice and meet the requirements of five core fiduciary principles:<\/p>\n

    \n
  1. Put the client\u2019s best interests first<\/li>\n
  2. Act with prudence; that is, with the skill, care, diligence and good judgment of a professional<\/li>\n
  3. Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts<\/li>\n
  4. Avoid conflicts of interest<\/li>\n
  5. Full disclose and fairly manage, in the client\u2019s favor, unavoidable conflicts<\/li>\n<\/ol>\n

    Why Aren\u2019t All Investment Advisors Required <\/i>to Act in Their Client\u2019s Best Interest?<\/b><\/p>\n

    This seems like common sense but, unfortunately, this issue is currently the subject of considerable debate. There are legislative and regulatory efforts underway that would require all financial advisors to adhere to the fiduciary standard but, not surprisingly, it is being met with fierce resistance from Wall Street<\/a> (i.e. the large brokerage firms, mutual funds, etc.).<\/p>\n

    Why would Wall Street resist something that makes so much sense? \u00a0\u00a0The reason is simple: \u00a0there are billions<\/i> of dollars of fees and profits at stake for them.<\/p>\n

    Until such time that the fiduciary standard of care applies equally to all investment advisors in the U.S. \u2013 and not just RIAs \u2013 it is prudent, and in your very best interest, to look at the services a Registered Investment Advisor can provide.<\/p>\n

    To learn more about Matt DiGennaro, view his Paladin Registry profile<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Typically, it is not too hard to find an advisor willing to give you investment advice.\u00a0\u00a0 But, when it comes to the standard of care for clients, are all investment advisors equal?\u00a0 In short, the answer is no. What is a Registered Investment Advisor (RIA)? Registered Investment Advisors (RIAs) are investment advisory firms that must register with, and agree to be regu\u00adlated by, the U.S. Securities & Exchange Commission or,<\/p>\n","protected":false},"author":39,"featured_media":3712,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[325],"tags":[],"class_list":["post-3709","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-advisors"],"yoast_head":"\nWhy Using a Registered Investment Advisor is in Your Best Interest<\/title>\n<meta name=\"description\" content=\"Consider a Registered Investment Advisor for advice as they must operate under and adhere to a fiduciary standard of care, unlike Wall Street advisors.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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