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Why a Registered Investment Advisor?
Registered Investment Advisors have a Fiduciary Duty to act solely in the best interest of their clients at all times.
Brokerage Firms generally are not fiduciaries to their clients, and they are not required to make decisions that are solely in their clients' best interests.
Unlike commission-driven salespeople who may be under pressure to push the "fund of the day," Registered Investment Advisors are not paid a commission. They have no proprietary products to sell. They are compensated directly by their clients, either on an hourly basis, or by a small percentage based on the size of the client's portfolio. Therefore, a Registered Investment Advisor has no financial incentive to buy and sell a client's investments, unless this activity contributes to the growth of the portfolio.
Consider the following: A financial advisor who is compensated by a third party for selling a particular financial product faces an inherent conflict of interest; he cannot be considered truly objective and unbiased. This is true, even if the advisor believes that he is acting in the best interest of the client.
Most financial advisors are salespeople who sell financial products. Their incomes are dependent on their ability to sell to their clients a limited number of the tens of thousands of financial products available today.
Registered Investment Advisors do not face these pressures, conflicts or restrictions.
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