Registration as an RIA gives advisors an advantage in the job market. As with any licensing process, this registration keeps other less-qualified advisors from entering the job market. This means that advisory firms that employ RIAs have an advantage because they can guarantee a level of quality based on the licensing process.
The role of financial advisors
RIAs work primarily for high-net-worth individuals. They manage the portfolios of their clients, using their knowledge to select a mix of financial instruments such as stocks or bonds that have the best outlook. An advisor with a proven track record can earn a generous fee, and many also enjoy a proportion of the profits from the portfolios they manage. However, technology threatens their role. Many investors are turning to robo-investment apps and automated advisors. These robo-advisors choose portfolios based on algorithms and therefore can offer lower fees.