Why Turn to a Registered Investment Advisor?
Many individuals and families look for guidance from a trusted financial advisor when managing their investments and family assets, to help grow their wealth and meet their financial goals. It is important to know that not all advisors are the same when it comes to their expertise, experience, advice and service. When choosing an advisor, one should consider whether the advisor is a Registered Investment Advisor (RIA) or a Broker-Dealer.
By definition, a Registered Investment Advisor (RIA) is an individual or firm registered with the Securities and Exchange Commission (SEC). Registration may also be required with state securities commissions, depending on the firm’s size. RIAs provide investment advice to their clients and assist in financial transactions such as trading and money movement within clients’ investment accounts. RIAs may offer more of a boutique investment experience as they are able to cater to specific types of clients. RIAs are paid as a percentage of assets under management, or by charging a fixed rate for services provided.
In contrast, Broker-Dealers also facilitate investment transactions but work through advisors to help clients with investment advice and product offerings. Broker-Dealers and their advisors can be paid through a commission or fee-based structure on the investments a client makes and products clients purchase. Broker-Dealers may be registered with the Financial Industry Regulatory Authority (FINRA) instead of the SEC, which is regulated under the Securities and Exchange Act of 1934. Because of this, Broker-Dealers are held to a different set of standards when offering financial and investment advice.
A crucial piece of information to know about RIAs is that they’re required to act as fiduciaries for their clients. The fiduciary standard imposes specific ethical and legal guidelines for how RIAs can manage client accounts. The fiduciary standard prevents RIAs from mismanaging client assets for their own personal benefit and instead requires them to always act in their clients’ best interests. Any potential conflicts of interest must be disclosed to clients.
On the other hand, Broker-Dealers are subject to a suitability standard, meaning the advice they offer to clients must be suitable for their clients’ needs, but does not necessarily need to be in their best interest. A broker-dealer is allowed to recommend investments that might earn them a larger commission if the investment or product meets the suitability standard.
Millerbernd Wealth Management conducts business as an RIA. By being an RIA and disassociating from the Broker-Dealer organizational structure, we can provide a boutique-like investment experience that is client-focused, using a wide variety of investment choices at a lower fee and at the highest fiduciary standard. And, because we are independent, we can take advantage of best-in-class investment management technologies and resources as we are not constrained by the offerings provided and required by a broker-dealer.
Who an advisor conducts their business through, how they are incentivized for their work and who their priority is when it comes to investing money can have a significant impact on a client’s investments and overall bottom line. At Millerbernd Wealth Management, our clients’ needs and best interests always come first. Our priority is to protect and grow our clients’ wealth using long-term strategies, value investing and reducing tax impact to achieve client goals. Millerbernd Wealth Management’s President and Owner, Nate Millerbernd, works directly with each client using his 24 years of industry experience, extensive research and investment knowledge. Please contact us if you would like to receive more information or set up a time to meet to discuss your financial situation.