Starting an RIA firm seems like a big task. Most financial advisors spend their lives working for private firms just because they are reluctant to start their own businesses. People believe that starting an RIA firm requires a lot of technical expertise and that not everyone can do it.
However, the case is quite simple. If you know how to start a ria firm, you will not spend a second working for somebody else. If you are confused about opening an RIA firm, here is what you should know.
A Registered Investment Advisor (RIA) firm aims at providing financial advice to clients and managing their investment portfolios. An RIA firm will advise its clients about securities investments.
An RIA firm is registered with the Securities and Exchange Commission (SEC) and aims at providing legal and competent advisory on multiple fronts, mainly associated with finances. RIA firms have fiduciary responsibility which means that they are obliged to provide advice that is in the best interests of their clients.
Opening or starting an RIA firm is not as difficult as one might think. There is a simple procedure that a financial advisor has to follow. After completing the documents, one can easily open an RIA firm and start providing advisory services to people. Steps to open an RIA firm include,
1. Registration with SEC
Registration with the Securities and Exchange Commission (SEC) is a legal requirement before you can open an RIA firm. The SEC will provide you with a list of practices that you might have to follow as a financial advisor. These practices are meant to control financial fraud and scams.
All RIA firms are required to disclose to their clients that they will provide financial advice based on the best interests of the client. The firms are also bound to disclose all the possible risks that clients might have to face by investing in certain things.
3. Fiduciary Responsibility
RIA firms are obliged to show fiduciary responsibility. They act as a representative for their clients in many deals. Therefore, as a firm owner, you can never gain customers’ trust unless you show a willingness to perform your duties honestly.
4. Compliance With FINRA
Financial Industry Regulatory Authority (FINRA) is a legal authority that controls and manages RIA firms. If you want to start an RIA firm, you will have to comply with the rules and regulations set by FINRA.
No business can be started without the completion of legal documents. Similarly, RIA firms require a series of documents that are registered with the SEC and comply with the rules of FINRA. These documents have legal authority and they are necessary for record-keeping.
The benefits of starting an RIA firm are multiple. Apart from being a business owner, you can enjoy the privileges of being flexible and having freedom of choice while dealing with clients.
You are the sole owner of all the profits you earn, you are not answerable to any other party. This provides you with the opportunity to grow professionally as well as personally.