The past few years have been a roller coaster, not only for the stock market but also for life itself.
In a rinse-and-repeat cycle, stocks fall as the pandemic, inflation, or Fed rate hikes darken the economic outlook, but then the coronavirus or inflation eases and the Fed returns to market. The prediction of a gentle rate cut sparked a backlash. .
After hitting record highs, markets have been reeling in recent weeks amid a resurgence in inflation that has raised concerns about whether the Fed will indeed cut interest rates this year.
What should the average investor do?
Many experts say the answer is simple. It’s about finding a registered investment advisor (RIA) of your choice that fits your financial profile. RIAs are firms that have a fiduciary responsibility to always act in the best interests of their clients. They charge commissions rather than sales commissions, employ qualified investment advisory agents (IARs) to provide financial advice, and increasingly take a holistic approach to their clients’ financial lives.
Other financial companies, such as broker-dealers, earn commissions by selling stocks, bonds, and mutual funds, and all they have to do is provide sound advice. In some cases, you may sell a more expensive product that generates more revenue, but does not necessarily help you achieve your personal long-term goals.
To streamline your search for an advisor, USA TODAY partnered with market research firm Statista for the second year in a row to rank the top 500 RIAs in the searchable list below.
This is no mean feat. At the end of 2022, he had 32,600 RIA firms, managing approximately $115 trillion in assets. About 99% of funds are overseen by the 15,100 largest firms registered with the Securities and Exchange Commission, according to the Investment Advisers Association (IAA), the RIA trade group. The remaining 17,500 RIAs each manage less than $100 million and are registered with state agencies.
This ranking is based on a company’s short- and long-term assets under management (AUM) growth and the number of recommendations it receives from customers and peers.
This year, in addition to providing overall rankings, USA TODAY and Statista have created separate groupings based on the amount of assets RIAs oversee, allowing readers to compare companies of similar size.
Smaller firms may have fewer clients per advisor and provide more personal service, but this is not always the case. Larger companies may be able to charge lower rates through volume-based discounts or have more resources available for specialized services.
You can also choose companies based on their location in the ranking.
At Westfler Advisors, a top New York City-based firm, assets grew 58% in one year and 69% in five years. No. 2 Align Impact in Santa Monica, Calif., is one of the smaller companies, but its assets more than doubled in one year. Cary Street Partners, Richmond, VA, 11th Featured on the main list and gained many recommendations from clients and colleagues.
Industry insiders say RIAs can serve an important purpose, especially during times of market and economic instability like now.
“Advice is needed when there is uncertainty in the market,” said Gail Bernstein, general counsel at the IAA. “We often hold hands.”
Eileen Stevens, a wealth advisor at Corient Private Wealth, an RIA in New York City, said a growing number of Americans who were investing on their own before the ups and downs of the pandemic are now seeking help. It is said that there is.
“They say, ‘It’s hard and scary to do it myself,'” Stevens says.
And while some people look to RIAs to just manage their investment portfolios, most also provide more comprehensive services that include retirement, estate, and tax planning, as well as bill payments and even college savings roadmaps. They’re looking for financial services, Stevens said.
Such a comprehensive approach not only maximizes investment returns, she says, but also allows you to develop life strategies that include starting a family and buying a home.
IAA’s Bernstein said that during market downturns, some people panic and want to sell their stocks quickly. Investment advisors may tell you to “knock it off a cliff” and “shut up and sit down,” she says.
“They might say, ‘I have college tuition coming up and I’m going to need that money in six months,'” Bernstein says.
RIAs typically charge an annual percentage of the assets they manage, often around 1%. Someone with a $100,000 portfolio will pay about $1,000 a year. Advisors typically buy and sell securities based on the client’s overall goals and oversee the funds throughout the year. RIAs typically require a minimum investment amount, such as $100,000 or $500,000, but most often the cash is held by a custodian such as a bank or broker-dealer.
Advisors can also charge a fixed annual fee regardless of the amount invested, a flat fee based on a one-time development of an extensive financial plan, or an hourly fee.
Many RIAs specialize in niche markets that require a more nuanced knowledge of their clients’ needs, such as athletes, restaurant owners, divorcees, medical professionals, and Gen Z.
Stevens said a growing number of people in their 20s are seeking financial advice, including new tech and hedge fund executives who made their fortunes early in their careers. That’s what it means.
Some young adults are seeking guidance on how to balance work-life so they can use their savings for travel and other experiences, she says. Others want to ensure their investments meet environmental, social and governance (ESG) objectives.
Young investors are also helping drive the popularity of robo-advisors, digital platforms that create algorithmically-based portfolios at low costs with little or no minimum investment. However, those who are RIAs must still serve their clients’ best interests.
“The obligations are still the same,” Bernstein said.
You can learn more about a company’s expertise and background from its website and from the company’s Form ADV filed with the SEC. You can also check a firm’s registration on the SEC’s Investment Adviser Disclosure Tool and check background and disciplinary actions on the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck website.
For more information on Statista’s methodology and contact information, please visit: Statista website.
