Advisory Account

An advisory account is an account through which an Independent Registered Investment Advisor (RIA) provides investment advice to their clients. It is important to understand that an advisory account is very different from a brokerage account. With advisory accounts, an RIA has a fiduciary obligation (they are legally obligated) to act in the best interests of their clients at all times. RIAs must provide clients with a Form ADV which describes how they do business, reveals any potential conflicts of interest, and clearly describes how they are compensated. Advisory account compensation is typically through a fee that is disclosed in advance. Any other forms of compensation such as commissions must be disclosed, acknowledged and agreed to in advance by the client. Also see the glossary definition for brokerage account.

Types of Financial Advisors

Fee Only Advisor

NAPFA Provides Consumers with Quality Control while Maintaining Flexibility for Financial Advisors

NAPFA is the National Association of Personal Financial Advisors.

NAPFA membership consists of financial advisors who provide comprehensive...


Financial Planners Concerned about Watered-Down Fiduciary Standards

The Obama Administration is interested in reform that would remove some of the conflicts of interest that exist in the world of financial advice. Financial planners, however, are concerned that these regulatory proposals which are intended to impose fiduciary obligations on all types of financial advisors may result in overall standards that are less stringent than what currently exists. Current fiduciary standards apply to an advisory account and largely impact registered investment advisors (...

Independent Financial Advisors Gaining Market Share

The Wall Street Journal reports that customers are moving towards independent registered investment advisors (RIA) and away from Wall Street brokerage firms. RIAs brought in $108 billion in new assets in 2008 while brokerage firms lost $8 billion. The change is seen in large part as a migration towards more objective financial advice. A registered investment advisor acts as a fiduciary , offers an advisory account, and is free of many of the potential conflicts of interest that are inherent in...

Obama Administration Proposes Fiduciary Standards for Brokers

The Obama administration's proposed financial services regulatory overhaul may have a profound impact on the way that investment advice is disseminated in the United States.

The administration's proposal would impose a...