Peter Kuperman on the Duties of a Registered Investment Adviser

Prior to launching my latest career as founder and a managing member of an investing strategy research firm, I spent seven years operating as an independent Registered Investment Adviser, or RIA. In the following primer, I describe what exactly an RIA is and what the job entails.

An RIA provides advice on securities trading, such as stocks and mutual funds. However, RIAs also maintain registration with the Securities and Exchange Commission (SEC) or an individual state’s securities agency and as such are regulated by the entity. The agency depends on the amount of investments RIAs manage: those with more than $25 million must register with the SEC; those with less register with the state.

RIAs work on the buying side of the investment market, particularly for institutional clients and individuals with high net worth (more than $1 million). RIAs typically earn a percentage of their client’s assets, with most receiving somewhere in the range of 1 percent. Their duties to these clients largely encompass putting together portfolios made up of bonds, mutual funds, individual stocks, or other investment vehicles. RIAs may also map out an asset’s life because the client plans to drawdown an account.

Many different financial professionals work with RIAs, among them research analysts, portfolio managers, client service representatives, and traders. Occasionally they hire certified public accountants, lawyers, and others in financial business to provide clients with greater resources. Furthermore, while RIA firms or individuals handle order creation themselves, they work with brokerage agencies that actually execute the trades.

About the Author: In the last 15 years, Peter Kuperman has worked as a Database Analyst for the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research and as a Financial Analyst for head fund researcher Bounty Service Group.

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