FLASHBACK FRIDAY: REGISTERED INVESTMENT ADVISOR
What does it take to become an RIA? Let today’s Flashback Friday edition guide you through the process.
An RIA pertains to a person or company which provides investment recommendations, analyses of investments, and advice to clients according to numerous factors. Only entities that manage at least $25 million in assets are permitted to operate.
All aspiring RIAs need to do the following: get a score of at least 72% in the Series 65 examination and pay $165 to the Securities and Exchange Commission. The passing score is 72%. It covers securities regulations on federal and state level, principles of economics, and methodologies for assessing securities, among others. An RIA license is given to you upon passing the exam. At this juncture, you are authorized to analyze and oversee client portfolios, give recommendations, and act as a financial planner.
Calls for Stricter Rules
Unlike other professionals, this designation does not require continuing education or rendering at least a specific number of working hours to retain their license. Hence, critics laugh at such prerequisites, saying brokers or investment advisors should obtain a particular level of education in order to manage the finances of their clients.
RIAs, however, are set to comply with the Labor Department’s new fiduciary rule in which advisors are required to assume a role as fiduciaries when managing their clients’ retirement accounts. In other words, the interest of clients over theirs.
But the new developments are not sufficient to appease the critics of lenient RIA regulations. Many are still calling for stricter requirements and continuing education for these professionals, emphasizing it would help filter the unethical or unskilled ones.
For now, what all RIA hopefuls can do is to pass the exam, follow the existing laws, and keep abreast of the latest news in the market and the industry. As much as possible, elevate your knowledge by reading books or taking courses.
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