5 Distinct Benefits of Working with a Registered Investment Advisor

First, let's ask, what is a Registered Investment Advisor?

And what makes this advisor different from a Registered Representative who works at my bank or a national brokerage firm? - A lot actually, keep reading.

A Registered Investment Advisor (RIA) is a professional independent advisory firm, that is held to the highest standard of care, the Fiduciary Standard - Registered Representatives at banks and brokerage firms are not. RIA's provide personalized financial advice to their clients, many of whom have complex financial needs. Because these advisors are independent, and are required to work in their client's best interest they are not tied to any particular family of funds or investment products, so they can use the investment that is best for the client.

On the other hand, If you've ever worked with a Registered Representative from one of the large firms (Wells Fargo, Morgan Stanley, Merrill Lynch, Edward Jones, etc.) you might have noticed that many of the investments (mutual fund or ETF) in your portfolio have the same names as where the advisor works. Coincidence? Nope. Morgan Stanley makes more money if a Morgan Stanley Registered Representative uses Morgan Stanley investments in their clients portfolios - to the detriment of their clients.

Most importantly, they don't have to work in your best interest. Huh, how is that you ask?

Well, it's the way the Wall Streets rules have been set up. They will work in their best interest, not yours and it's completely legal, and in my mind completely wrong. To make matters even more confusing, Registered Representatives at these large firms can have titles such as Advisor, Financial Advisor, Financial Planner...but in fact, legally they are just Registered Representatives of the firms they work for.

As a Independent RIA (Registered Investment Advisor) and working under the fiduciary standard, Rossi Financial Group is held to the highest standard of care—and we are required to act in the best interests of our clients at all times. Period.

So what are the benefits of working with an Independent Registered Investment Advisor?

1. First and foremost, Registered Investment Advisor are Fiduciaries. We always work in our clients best interest. The "other guys" don't. They work under a lower standard of care. What does that mean? They use higher priced and typically poor performing investments. Their advice is driven by what's best for the firm they work for, and not for you.
2. Customized Guidance based on your entire financial picture. RIA's are not tied to any particular family of funds or investment products. So whether you need help with retirement planning, a tax situation, estate planning, or managing assets at multiple places, independent RIA's have the freedom to choose from a wide range of investment options in order to tailor our advice based on what’s best for you. We also coordinate with outside experts CPA's, attorney's, etc.
3. A Fee Structure that is Simple and Transparent. The fee structure is simple, transparent, and easy to understand.
4. Lower Fees, from what I've seen, and I've seen a lot of the "other guys" fees.
5. Your Money is held by an Independent Custodian. Independent Registered Advisors use independent custodians like Charles Schwab and others, to hold, and safeguard clients’ assets. For many investors, this provides a reassuring system of checks and balances—your money is not held by the same person who advises you about how to invest it. The largest custodian, Charles Schwab, has provided custodial services to independent financial advisors for over 25 years, 6 trillion in client assets, and they proudly support over 7,000 Independent RIA's and the important work we do for our clients.

These 5 distinct benefits can make a dramatic difference in your overall financial well being. While I have a strong opinion about what type of firm you should work with, it doesn’t change the facts. So read, research, and ask a lot of questions before you enter into any financial relationship. In fact, I would require anyone you work with to sign a Fiduciary Pledge that explicitly states they will always work in your best interest. We sign one for every client.


-Paul R. Rossi, CFA

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