Registered Investment Advisor update
In December 2022 Satori Traders LLC withdrew its registration as a California Registered investment advisor (RIA). At the same time, Bryan V Post withdrew his registration as a California Registered investment advisor representative (IAR).
We will continue providing Investment information but we are no longer managing client money.
This guide on finding a Registered investment advisor is provided for your benefit.
In general, the SEC regulates Investment advisors (IAs) with more than $100 million in assets under management (AUM) while IAs with less than $100 million in AUM are regulated at the state level.
Because Corporations in America are treated as humans, some of the language describing RIAs can be confusing.
For example, Investment management companies are RIAs, while the firm's advisors are Investment Advisor representatives (IAR).
Whether we are talking about the IA firm (RIA) or the IAR, the key distinction to understand as an investor is that both the RIA and the IAR have a fiduciary duty to their clients.
The SEC requires them to exercise loyalty and prudence in all matters involving the client’s money.
This is a higher standard of care than is required of non-registered professionals like Financial planners.
SEC-Registered investment advisor requirements
There are three primary requirements for SEC-Registered investment advisor representatives (IARs) to meet:
1) Hold a Bachelor’s degree in any subject
2) Pass the Uniform Investment Adviser Law Exam (the Series 65 exam)
3) Complete and file SEC Form ADV Parts 1, 2 & 3
Registered investment advisor vs Financial advisor
There are three key differences between a Registered investment advisor (RIA) and a Financial advisor.
First, “Investment advisor” is a legal term which is clearly defined by the SEC while “Financial advisor” is a generic term that encompasses several different types of financial professionals.
Second, RIAs and IARs are regulated by the SEC or by a State’s securities regulatory authority while Financial advisors may be held to a lesser standard.
Third, and most importantly, RIAs and IARs are legally required to act as fiduciaries, putting their client’s interests ahead of their own. Financial advisors, on the other hand, may or may not be legally accountable to the fiduciary role.
Financial advisors who operate without a fiduciary role often have conflicts of interest with their clients. These professionals may favor their employer’s interests over the client’s financial wellbeing and in many cases, they receive revenue from third-parties like mutual funds and insurance companies.
To obtain conflict-free financial advice make sure your advisor acts as a fiduciary.
Registered investment advisor search
There are multiple ways to search for a Registered investment advisor.
Start with family, friends, and associates. Personal recommendations are always best when shopping for professional service providers.
In an internet search you may find that Google highlights a few IARs in your local area. These “Google Screened” Investment advisors meet the following requirements:
• Hold a valid financial license
• Have professional liability insurance (Errors & Omissions)
• Pass a background check
You can refine your search by specifying the type of Investments you are interested in. For example, add “Precious metals” or “alternative Investments” to your search.
Once you find an Investment advisor representative that you may be comfortable working with, verify that they are in good standing with the SEC.
Ask the candidate IAR for their CRD (Central Registration Depository) number and the CRD number of the RIA they represent. These numbers should be provided in the Disclosure forms (ADV Form parts 2A and 2B) that the IAR will offer.
Take the CRD numbers to this website: http://www.adviserinfo.sec.gov/
and verify that the Investment advisor is in “Approved” status.
If the IA has filed any Disclosures, read them and make sure you are comfortable with the contents.
While you are at the SEC site download the “Part 2 Brochures” and read them. These documents will describe the RIA and IAR(s) along with their approach to investing.
List of Registered investment advisors
There is a psychological reason for having multiple candidate RIAs to choose from.
When you have a list of Registered investment advisors to choose from it is easier to say,
after making initial contact.
Also, speaking with multiple IAs before making a selection will help you gain clarity on the services you want a financial professional to provide.
Spend some time shopping for an appropriate Investment advisor. The individual or firm you choose could have a material effect on your financial future.
Registered investment advisor near me
Do you really need your Registered investment advisor located near you?
That depends largely on your personal preferences and your Investment objectives.
If you are turning the family fortune over to an Investment advisor, then by all means, develop a face-to-face relationship with that individual and their firm. Remember the “Google Screened” IAs mentioned above. That is a good starting point for finding a qualified IAR nearby.
If your current objective is obtaining one-time Investment advice, that can probably be accomplished over the telephone or online, in teleconference.
What does an Investment advisor do
Investment advisors manage money and/or provide advice to others on how to manage money, that’s the simplest answer.
The California Department of Financial Protection & Innovation (DFPI) provides this description for what an Investment advisor does:
“An investment adviser (“IA”) is defined in Corporations Code (“Code”) Section 25009 generally as any person who, for Compensation, engages in the Business of Advising others, either directly or indirectly through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, publishes analyses or reports concerning securities.”
Some IAs take a full-spectrum approach to their clients’ financial picture by offering “Wealth management” services. Along with Investment planning and management, they also provide Estate planning, retirement planning, accounting, and tax services.
Wealth management IAs often hire specialized Investment advisors to manage portions of a client’s Portfolio. For example, a wealth manager of a well-diversified Portfolio could hire an IA who specializes in the Precious metals or energy sectors.
The primary task for all Investment advisors is to determine their client’s Investment objectives and tolerance for risk. Once that has been accomplished the IA can make Investment recommendations that are appropriate for the client.
Fee only Investment advisors
There are three primary models for how an IA is compensated:
1. Commission-based – typically a variable amount based on account size (lower rate for large accounts)
2. Combination of commissions and fees – one fee for account management, additional fees for specific services
Commission-based IAs receive revenue based on the specific products they sell to their clients. This compensation creates a potential conflict of interest where the IA might not put the client’s interests ahead of their own.
The fee-only model minimizes conflicts of interest and allows the Investment advisor to act as a fiduciary.
Fee-only IAs may charge a flat fee, an hourly fee, or a fee based on account size.
When possible, work with Investment advisors (RIAs and IARs) and other financial professionals who are required to act as fiduciaries. Without the fiduciary role it is likely that the client’s financial wellbeing is not the professional’s primary concern.
Spend some time shopping for a qualified IA. The choice you make could have a significant impact on your financial well-being.
Depending on your current objectives, you may not need a face-to-face Investment advisor. A one-time, fee-only consultation over the phone or an online teleconference may accomplish everything you need.
If you decide that you need a local Investment advisor and don’t have a personal recommendation, give the Google Screened professionals a try. Google has done some of your due diligence for you by verifying that these IAs have a valid license, have insurance, and pass a background investigation.
Satori Traders and Bryan V Post are here to help you with your Precious metals Investments. Give us a call today and let’s get started!