What is a registered investment adviser (RIA)?

How RIA registration works

Investment advisers register with the SEC or state securities authorities, depending on the firm and its circumstances. Form ADV is the uniform form used for SEC and state registration. Registration makes key information available to regulators and the public, but it is not an endorsement of an adviser's quality or a promise of investment results.

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What fiduciary duty means, and what it does not

An investment adviser has a fiduciary duty to act in a client's best interest and to provide full and fair disclosure of material facts and conflicts of interest. That duty may require an adviser to avoid a conflict or obtain informed consent when one cannot be avoided. It does not guarantee a particular level of service, eliminate investment risk, or ensure that an investment decision produces a positive result.

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How to review Form ADV

Form ADV can help you understand an adviser's services, fees, business practices, conflicts, ownership, and disciplinary information. The brochure, commonly called Part 2, is written in narrative form and should describe the advisory relationship in plain English. You can search filings through the SEC's Investment Adviser Public Disclosure website, then ask the firm about anything you do not understand.

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Practical questions to ask an adviser

Ask how the firm is compensated, which services are included, whether it has financial or other conflicts to disclose, and where you can review its current Form ADV. You can also ask who holds client assets and how the firm handles changes to its services or fees. Clear answers can help you compare advisory relationships, but they are only one part of choosing an adviser.

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FAQ: Is every RIA registered with the SEC?

No. Some investment advisers register with state securities authorities rather than the SEC. The appropriate registration path depends on the adviser and its circumstances. Form ADV is used for both SEC and state registration, and public information may be available through Investment Adviser Public Disclosure.

FAQ: Does RIA registration mean an adviser is fee-only?

No. Registration status and compensation are separate questions. Form ADV can help you understand how a firm is paid and the conflicts it discloses. Ask the firm directly how it is compensated and review the relevant disclosure documents before deciding whether to work together.

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FAQ: Where can I verify an adviser?

Start with the SEC's Investment Adviser Public Disclosure website to review an investment adviser's registration and Form ADV filings. If the person also works as a broker, FINRA BrokerCheck may provide additional registration and disclosure information. Use these tools as a starting point, then discuss any questions directly with the firm.