Registered Investment Advisors

Details

Category: Investments

An RIA firm is a progressive business in today's changing landscape of money management. It is an excellent place to begin a career or to focus in on a particular aspect of the business after cutting your teeth elsewhere for a few years. Most RIA firms are owned privately, which can allow for greater opportunities for equity in the company. They are poised for fantastic growth as baby boomers are finishing up their peak earnings years and entering into the highest net worth phase of their lives. The RIA provides an additional responsibility through the holdings that are brought in by clients and requested not to be sold.

As they operate in many similar ways, the same types of jobs that you would see associated with a mutual fund are also found in an RIA: research analysts, portfolio managers, traders, and technical/operational staff and client service professionals. The research conducted for an RIA is also similar to what you would find at a mutual fund. The main responsibilities include monitoring existing holdings and searching for suitable candidates for purchase. Many times a portfolio must be constructed "around" a large position; in these cases the portfolio manager must devise ways to mitigate the risk inherent in owning so much of one company.

Registered investment advisors could be managing thousands of unique portfolios. This is because high-net-worth individuals and institutional investors are groups with unique needs. The advising firm will work with the clients to design a portfolio that suits the client's situation. It could be that the client has a large position in one particular stock with a very low cost basis; even though it represents a larger portion of its portfolio than would be ideal for diversification, the tax consequences are too severe to sell the position all at once. Or the client may be drawing down on an account using a combination of interest income and outflows and need the assistance of a professional to map the asset's life.

The financial services industry is a rapidly changing professional environment. As the needs and desires of consumers change, firms engaged in managing money are also evolving. A registered investment advisor (RIA) manages the assets of high net-worth individuals and institutional investors, and sits on the buy side of the investment field. He or she must register with the Securities and Exchange Commission (SEC) and any states in which he or she operates. Most RIAs are partnerships or corporations but individuals can also register as RIAs. If you're interested in a career with an RIA firm, read on to learn more about this part of the financial services industry.