What is a Registered Investment Advisor (RIA)?
Any individual or firm that charges fees to a client for investment advice must be registered with a state agency or the SEC or both depending on the state they are operating in.
How does an RIA differ from a stock broker?
A stock broker is licensed by the National Association of Securities Dealers to earn commissions for the sale of securities or products. Technically a stock broker earns income by selling products and advice is “incidental” to the sale.
What is the primary advantage of an RIA?
The advantage is objective advice. Since we work exclusively on a fee only basis and do not earn commissions from the products sold, our allegiance is only to the client and not to a company that we represent.
Can an RIA be a stock broker?
Yes. If a broker is licensed through the NASD and registers as a Registered Investment Advisor, he or she could sell products, earn commissions and also charge fees for advice.
How is Asset Management Associates registered?
John R. Ruocco, Asset Management Associates, is registered as a fee only advisor through the State of Connecticut Department of Banking. In the 1980's John Ruocco was licensed through the NASD to sell investment products on a commission basis. In order to maintain a commitment to the fee only concept, those licenses were allowed to expire. Commissions are not earned on any products or firms recommended.
Why are there so few fee only advisors?
It is easier for a sales representative to sell a pre-packaged product and get paid, than to work for a client on an on-going basis and maintain an acceptable level of service or performance. In many cases, when a broker finally makes the sale, his or her job is done. In our case, it is just starting.
What is a financial planner?
A true financial planner will review in detail a client's entire financial situation and make recommendations to improve it. The most popular designation for this is the CFP or Certified Financial Planner. The CFP must be registered as an advisor (RIA) in order to receive fees for the planning and advice. CFPs could also be licensed through the NASD to sell products and this could limit their objectivity.
What is the focus of Asset Management Associates?
The primary focus is managing an investment portfolio. We will work with clients to achieve their overall objectives by working with outside tax, insurance and legal professionals.
How secure are my accounts?
All accounts are held directly by the client with a major brokerage firm or investment company. The two major custodians we use are Charles Schwab and T.D. Ameritrade. These are well established firms that offer all of the insurance and safeguards required by the S.E.C. and all regulatory agencies.