What is an RIA and what does 'fiduciary' mean?
A Registered Investment Advisor (RIA) is an investment advisor (IA) registered with the Securities and Exchange Commission or a state's securities agency. As described in the US Investment Advisers Act of 1940, an IA must adhere to a fiduciary standard of care. This standard requires IAs to act and serve a client's best interests with the intent to eliminate all potential conflicts of interest. This is in contrast to registered representatives of Broker/Dealers (or BDs) who are held to a less stringent 'suitability standard'.
How are you different from a stock broker or a bank?
A stock broker or advisor that works for a broker/dealer (e.g. Merrill Lynch, Edward Jones, etc.) or a bank (e.g. UBS, Citigroup) is someone who facilitates investment transactions. Many BDs also have representatives that can act as advisors to help you decide which investments to purchase, and which to sell. BDs and their representatives are regulated by FINRA - a private corporation that acts as a self-regulatory organization (SRO). In most cases, a BD representative receives his or her compensation through commissions. These commissions are based on investment transactions made on your behalf. However, a BD is not required to meet the same fiduciary standards as an RIA. Through lobbying efforts in the early '80s, BDs gained an exemption to the 1940's Investment Advisors Act. As a result, an advisor with a BD can recommend investments that give him or her a bigger commission, even if there is a product that might actually be better for your situation (think mutual funds, annuities, and insurance).
What are the benefits of being a client of Inukshuk Investments?
At Inukshuk we pride ourselves on our high level of personalized service. As a client, you have direct access to your advisor who is the direct manager of your portfolio. There are no third party funds or money managers, which has the added benefit of keeping our fees low. As an RIA, we have a fiduciary standard of care that is written into each client contract. In addition, each advisor has achieved the esteemed Chartered Financial Analyst (CFA) designation. As a CFA Charterholder, your adviser has shown a commitment to the highest investment and ethical standards in the industry. Lastly, we are an advisor-owned institution – meaning we are beholden to the interests of our clients first and only, not to shareholders as with most publicly traded banks and BDs.
What questions should I be asking of any investment or financial advisor?
The relationship between an advisor and client should be one built on trust. The advisor, after all, will be the person you rely on when the financial markets experience volatility or turmoil, as will inevitably occur. They are also your guide not only with financial choices but with important life decisions. It is okay to ask the advisor similarly personal information about their experience, credentials, compensation, and conflicts of interest. Be forewarned, many in the finance sector are more salesmen (brokers) than advisors and their answers are likely polished. Take your time and follow-up with a bit of research of your own. For some further insights, check out these articles below:
Frequently Asked Questions (FAQs)
Inukshuk Investments is a state-registered investment advisor (RIA) with a fiduciary duty to look out for our client's best interest. We provide investment management and financial planning services. Below are a few of our most frequently asked questions.
Can I start as financial planning client and then ask you to manage my investments?
Absolutely. With no significant long-term commitment, beginning with a financial plan is an excellent way to get to know one another and build a foundation of trust. From there it is easy to expand our agreement to include the management of your investment portfolios.
How is Inukshuk different from other RIA advisors?
As RIAs are different from Broker/Dealers, not all RIAs are alike. The biggest differences primarily lie within an advisor's service offerings and investment strategy. Many offer just investment management, while other advisers also offer financial planning services. Some use 'model portfolios' across many clients while another may have fewer clients employing a custom portfolio management style. An investment strategy is the means by which an advisor works to achieve a client's objectives. Their strategy may be passive or active, utilizing individual securities and/or funds. There are almost as many strategies as there are investors, and while there is no absolute correct way, it is very important that whichever strategy one chooses, it matches that individual's investment objectives, personality, and temperament. Not all strategies are right for each individual, and a poorly matched strategy can lead to heartburn and a tumultuous relationship with your advisor.
Inukshuk offers investment management and financial planning services. We employ an active investment strategy utilizing individual securities in custom portfolios. Our highly personalized level of service aims to achieve a solid foundation of trust integral in every client relationship.