What difference does it make: Stock Broker vs. Registered Investment Advisor (RIA)?

Although stock brokers may call themselves “Financial Advisors” or “Wealth Management Advisors,” technically they are in the business of selling you investments.  They are obliged merely to recommend suitable investments to you.  Suitability is so loosely defined that almost anything in the financial marketplace could wind up in your portfolio.  Since many brokers work for an upfront commission, the future success or failure of your investment may have little impact on their livelihood.

The RIA, on the other hand, is committed to your future success.  We take on the role of a fiduciary with a promise to put your interests ahead of our own.  We then tie our compensation to your investments by working for a fee for the assets managed.  If the assets increase in value, so does our income.  If your portfolio declines in value, so does our pay.  We sit on the same side of the desk with you!

Here’s a little chart to illustrate the differences: