What to Look for in a Registered Investment Advisor (RIA)

When selecting a Registered Investment Advisor (RIA), it’s essential to look beyond surface-level qualifications. The relationship you build with an advisor can have a significant impact on your financial success, so understanding their approach and how they can meet your unique needs is key. Here are several critical factors to consider when choosing an RIA:

1. Independence vs. Affiliation
One aspect to consider is whether the RIA is independent or affiliated with a larger institution. Independence often offers greater flexibility in investment choices, while affiliation may come with access to proprietary resources. Neither is inherently better than the other; it just depends on what you prioritize. Being informed about this distinction will help you determine which arrangement suits your goals best.

2. Team Structure
Next, consider how the advisory firm’s team is structured. Will you be working with a single individual who manages everything, or will you have access to a team of specialists? A team of advisors can provide more resources and insights, giving you the benefit of various areas of expertise to guide your financial decisions. This collaborative approach can be especially beneficial for more complex financial situations.

3. Investment Philosophy
It’s critical to align with an RIA whose investment philosophy matches your own. Are they active market timers, frequently buying and selling, or do they adopt a long-term investment approach? Some investors enjoy the thrill of getting in and out of the market frequently. At Schechter, we believe in long-term investing, focusing on strategies that can grow your wealth steadily over 10, 20, or even 30 years. Having a clear conversation about investment philosophy can ensure your advisor’s approach resonates with your financial goals.

4. Services Provided
A crucial question to ask any prospective advisor is, “What can you take off my plate?” The best RIAs don't just manage money but help you simplify your life by handling various aspects of financial planning. From investment selection and portfolio management to tax strategies and estate planning, understanding the full scope of services they provide can make all the difference. Ensure the advisor’s services align with your needs so you can focus on what brings you happiness, while they handle the financial intricacies.

5. Fees and Alternative Investments
It’s essential to understand the advisor’s fee structure. How do they charge for their services, and are there any hidden fees? Also, inquire about the alternative investments they may offer. Alternative investments, such as private equity or real estate, can diversify your portfolio and potentially boost returns. Ask about their selection process for these investments and how tax-sensitive they are. For instance, strategies like tax-loss harvesting may add significant value, potentially boosting after-tax returns by 1% per year.

6. Alignment of Goals
One of the most critical aspects of an advisor-client relationship is ensuring that your goals align with the advisor’s expertise. If you’re looking for one type of service, but your advisor specializes in something else, that misalignment could lead to poor results. Having clear conversations upfront about your goals and the advisor’s specialization ensures that you’re both on the same page and working toward the same long-term vision.

Conclusion
Choosing an RIA isn’t just about finding someone to manage your investments. It’s about creating a relationship with a team that understands your goals, aligns with your values, and can guide you through complex financial decisions. By asking the right questions and understanding these key factors—independence, team structure, investment philosophy, services offered, fees, and alignment—you’ll be in a better position to choose the advisor that’s right for you. Schechter is a firm that prides itself on these very principles, helping clients achieve their long-term financial goals through a collaborative and personalized approach.