Frequently Asked Questions

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 Department of Banking  the SEC or both depending on the state they are operating in. Fees may be paid to the advisor by check or deducted from an investment account that is managed by the advisor and authorized by the client.

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 a Registered Investment Advisor (RIA) is paid only by the client, and does not earn commissions from the products sold, the allegiance is only to the client.

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. This is where the consumer gets most confused.  They are paying a fee for objective advice then end up paying commissions when they invest the money or some of the money. 

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. We also do not get any fees from Charles Schwab.   

Why are there so few fee only advisors?

The fee based advisory platform is the fastest growing segment of the investment industry.  Still many practitioners offer both fee and commission services. 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, the work is just starting. A lot of brokers offer fee only “managed accounts” .  These are really products, somewhat like a mutual fund.  The broker places the client into what is determined to be an appropriate portfolio and the manager of that portfolio manages the account as it is outlined in a prospectus.  The consumer may fail to understand that the flexibility of that account is limited by the constraints outlined in the prospectus. 

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. Although the CFP program is a great curriculum, it does not limit the CFP to only financial planning for a fee.  They can still be licensed through the NASD to sell products and earn commissions on those sales.  This could limit their objectivity as described above.

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 which could be growing their investment assets, generating income or doing some combination of the two.  

How secure are my accounts?

All accounts are held directly by the client with a major brokerage firm or investment company. The major custodian we use is Charles Schwab. They are a well-established firm that offers all of the insurance and safeguards required by the S.E.C. and all regulatory agencies.


Asset Management Associates

P.O. Box 742

South Windsor, CT 06074