A Registered Investment Advisor is a fiduciary. A fiduciary is a legal standard adopted by a relatively small but growing segment of financial advisors. They have abandoned their big-box firms, relinquished their broker status and made the decision to become an RIA. RIAs get paid for financial advice and must remove any potential conflicts of interest(or disclose them to clients) and put the client’s best interest above their own. Brokerage firms, banks and credit unions only have to invest in what is “suitable” for clients even if it is not in their best interest. Before you make a decision about where to get your advice, it’s a good idea to understand your options, as well as the source of the advice. In many cases, you have a choice between an RIA or a broker.

​VIMA RIA is an individual who has completed the qualifications to be registered with the SEC. An RIA works with clients to help them manage their assets. In addition to creating financial plans to improve the client’s wealth and diversification, an RIA can also make trades on your behalf. An RIA is required by law to act as a fiduciary to clients. As a result, the client’s best interest is the most important consideration when making recommendations. VIMA provides advice on client 401k plan accounts, brokers are not allowed to provide this service.

A broker is an individual who facilitates investment transactions. In most cases, a broker receives compensation through commissions. You must be aware that a broker isn’t required to meet fiduciary standards, they do not have to act in their clients best interest. Brokers are able to recommend investments that give them the bigger commission, even if there is a product that is more fee friendly. The SEC does not require brokers to make investments based on the best interest of the client.

Brokers have begun to use the title of “Wealth Manager”, “Investment Advisor” or “Financial Advisor” without accepting the fiduciary duty, acting within your clients best interest, of a RIA. It is common to find that the “suitable” investments at large brokerage firms are the house products that pay the highest commissions to the broker and the firm. This compensation system can lead a broker to give you a biased investment advice towards riskier investments because they pay the highest commission, while safe(fixed) investments have lower compensation. It is in your best interest for a broker to recommend no-load investments although they won’t make a commission from the sale so it is avoided.