What is Registered Investment Advisor (RIA)?

A registered investment advisor (RIA) is an individual or investment company in the United States that is responsible for advising clients on their investment decisions and the composition of their portfolios. RIAs must be registered on a state level and with the Securities and Exchange Commission (SEC) in order to prove their qualifications and expertise. More importantly, RIAs have a legal responsibility to give their clients investment advice that is in their best interest. RIAs normally earn their revenue through a predetermined agreement based on a certain percentage of the client's assets under management (AUM) each year.