RIA Versus Broker
Comparison of Advisors
| Registered Investment Advisor | Broker/Financial Advisor | |
|---|---|---|
| Legal Standard | Fiduciary Standard - acting in best interest of client and owe clients a duty of loyalty and care | Suitability rule - product only has to be suitable not lowest cost or be in client's best interest |
| Firm Ownership | Typically independently owned and operated | Typically owned by large multi-national parent company |
| Custody of Assets |
Independent custodian | Often, the parent company |
| Legal Standard | Fiduciary Standard - acting in best interest of client and owe clients a duty of loyalty and care | Suitability rule - product only has to be suitable not lowest cost or be in client's best interest |
| Investment Offering |
Our open platform structure allows us to monitor our client's holdings with many different custodians | Open, but may have pressure to direct investment to in-house proprietary products |
| Process | Consultative process providing advice and recommendations | A broker is often a salesman who acts as an intermediary between a buyer and a seller |
| Investment Decisions |
Personal advice based on financial plan and in best interest of client | A broker typically relies on parent company for generic recommendations and portfolio allocations |
| Compensation | Transparent, advisory fee only | Commissions, Loads, 12b-1 fee, Finder's Fee, Sales bonus, based on type of product and number of trades |
| Products | Investment advice and we strive for best of class investment manager recommendations | Many brokers sell their parent company's investment products and receive extra compensation for sale |