Registered Investment Advisors

Registered Investment Advisors: Those can work at full service brokerage firms and hence are to be considered the same as brokers. There are those who are independent and are basically in the business of providing advice. They will work at small independent firms that you probably have never heard of before. They are basically paid for the advice given and usually not based on transactions. Since most are not broker-dealers, they usually deal with one or more discount brokerage firm that holds your account and executes trades. Registered Investment Advisers, or RIAs, can be compensated in many different varieties:

-They can be paid by commissions on investments, be it stock, bond, or Mutual Fund sales.

-Fee only through a percentage of assets under management: This varies between slightly less than 1% to slightly more than 2%. It is usually a sliding scale, meaning that the annual fee depends on account size with the fee getting smaller the bigger the account size is. Assuming its 1.5% annually then for example if you account size is $100,000, then their fee will be $1,500 annually charged in 4 quarterly installments. This is an approximate figure since your account will be valued at the end of each quarter and will be assessed the quarterly fee (1.5% divided by four). It is important to note that this fee does not include brokerage fees that are charged by the discount brokerage firm to buy and sell securities in your account. This type of RIAs is the most common.

– A combination of commissions and a percentage of assets.

-Fee only through an hourly fee for planning and executing a portfolio for you and then checking it on a periodic basis. This type of RIAs is the least common.