Jun

15

Utah Financial Advisor & Planner

Standards matter, especially in wealth management.

Who should manage significant wealth? In recent years, more and more high net worth households have found their answer to that question: a Registered Investment Advisor.

What is the RIA difference? RIAs have a fiduciary duty to act in your best interest. That is a legal obligation, and it is expressed in the investment recommendations the RIA and their representatives make and the advice and guidance they offer. If even the potential for a conflict of interest exists, it must be fully disclosed.1,2

A Financial Planner is not asked to work by a fiduciary standard, only a suitability standard. Under a suitability standard, a planner is asked to recommend investment products that are “suitable” for a client – an investment that is regarded as appropriate for his or her objectives. An investment conveniently offered by his or her planner might meet that standard – one offered with little or no evaluation of other options, one that may have high fees and bring that planner a relatively large commission.1

In fact, the typical financial planner works on a commission basis – a percentage of his or her compensation depends on product sales. Just who ends up paying the planner those commissions? They may be paid by the investment companies involved – or the client. They may not even be mentioned until after the product sale.1

In contrast, many RIAs manage the assets of high net worth investors on a fee-only basis. The management fees usually represent a percentage of invested assets belonging to the client. Hourly or per-project fees may be charged for other services. These fees are disclosed up front. RIAs are not affiliated with brokerage firms, so the potential for brokerage directives coloring the advisor-client relationship is diminished.1,2

As the designation implies, an RIA is an investment advisor that has registered with either the Securities and Exchange Commission (SEC) or the securities authorities in the state(s) in which they operate. Technically speaking, an RIA is a financial firm. The individual advisors working for the RIA are IARs, or Investment Advisor Representatives – but the phrase “RIA” is often informally used to refer to both an IAR and the firm for which she or he works.1,2

The demand for RIAs is growing. Individuals, couples, families and institutions with sizable wealth management concerns often turn toward RIAs. From 2008-12, assets under management by RIAs increased an average of 8.8% annually, to the point where they were managing $1.5 trillion of invested assets in 2014. Additionally, the number of RIAs grew by 8% per year from 2008-12.3

Those statistics bear out an emerging truth: high net worth households want unbiased investment consulting, and see value in working with RIAs that are fee-only.

The typical RIA firm is built to address varied client priorities. An independent RIA firm is usually owned and operated by a highly experienced financial advisor. That individual does not usually work alone. Often, the RIA firm employs or retains a “team” of professionals skilled in disciplines that may include portfolio management, tax planning, estate planning and retirement planning. These individuals are usually financial advisors who have spent significant time in the industry, and who have committed themselves to continuing education.2

Standards matter in life, and they especially matter in wealth management. As you want your wealth managed with high standards, a Registered Investment Advisor is the clear choice.

 

Citations.
1 – sfchronicle.com/business/networth/article/Proposed-rule-would-lead-to-better-advice-on-6207776.php [4/17/15]
2 – nerdwallet.com/finance/question/what-s-the-difference-between-a-registered-investment-advisor-and-the-traditional-advisor-working-at-a-large-bank-or-brokerage-f-521 [8/13/13]
3 – forbes.com/sites/halahtouryalai/2014/04/16/still-booming-top-rias-keep-getting-bigger/ [4/16/14]

This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Mark Lund, Mark is known as The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and financial Advisor services for professional athletes and individuals. Stonecreek is located in Salt Lake City, Murray, West Jordan, Sandy, Draper, South Jordan, Provo, Orem, Lehi, Highland, Alpine, and American Fork in Utah.

Share This With Others:
Facebooktwitterlinkedin

Category: Articles, Blog

About the Author ()

Mark K. Lund is the firm's founder, CEO and author of The Effective Investor, a #1 Best Seller. He has written articles for or been quoted in: The Wall Street Journal, The Salt Lake Tribune, The Enterprise Newspaper, The Utah Business Connect Magazine, US News & World Report, and Newsmax.com, just to name a few.  Mark publishes two newsletters called, “The Mark Lund Growth Report” and “Mark Lund on Money.”  Mark provides CPE (continuing professional education) courses for CPAs.  You may also have seen him on KUTV Channel 2, or as a guest speaker at a local association or business. Mark provides investment and retirement planning services for individuals and 401(k) consulting for small businesses. In his book, The Effective Investor, Mark exposes the false narrative magazines, media, big Wall Street firms, and most advisors want you to believe. The good news is that Mark will show you that you don’t need their speculative ways of investing in order to be successful. Get a free copy when you schedule your initial consultation.

Leave a Reply