An RIA firm, or registered investment advisor firm, is a financial firm that advises clients on securities investments and may manage their investment portfolios. RIAs are registered with either the U.S. Securities and Exchange Commission (SEC) or state securities administrators. They have a fiduciary obligation to their clients, meaning that they have a fundamental duty to always and only provide investment advice that is in their client’s best interests. Key features of an RIA firm include:

• Registration: RIAs must register with the SEC or a state regulatory agency, depending on the value of assets under the RIA’s management.

• Fiduciary Duty: Unlike broker-dealers, RIAs have a fiduciary duty to put the best interests of the client first.

• Services: RIAs provide financial planning, investment advisory, and wealth management services for clients in a fiduciary capacity.

• Fees: RIAs typically earn their income through management fees, calculated as a percentage of a client’s assets under management (AUM) by the RIA.

RIAs often work with high-net-worth clients and institutional investors to manage their assets. They may make trades in or out of a portfolio on a client’s behalf or offer advice and guidance on various investment strategies. The fees charged by RIAs are typically around 1% of AUM.