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In today's video we learn the difference between a Registered Investment Advisor (RIA) and a Stock Broker.

Note that very few professionals calling themselves "Financial Advisors" are also Registered Investment Advisors (RIA). Knowing the difference is critical. In fact, many stock brokers now call themselves financial advisors to avoid the stigma associated with stock brokers.

An RIA has been through a rigorous qualification process and is required by law to act as a fiduciary to the client. This means that the RIA must always act in the best interest of the client both presently and in the future.

A stock broker represents the brokerage firm for whom he or she is employed. In recommending an investment for you to purchase, the broker must only meet a standard of "suitability" at the time the investment is made. There is no on-going responsibility as that which is required of the fiduciary, the RIA.

Further, there is a difference in the way they are compensated. A broker gets paid a commission when a transaction, buy or sell, is made. Therefore, there exists a conflict of interest in the event that it is best for you to make no transaction at all, because there is no financial incentive for the broker to make this recommendation.

An RIA working as a fee-only investment advisor is not compensated via a commission based on a buy or sell transaction and therefore has no personal financial incentive to recommend a transaction when none is warranted.

When choosing an investment advisor give strong consideration to financial advisors who are registered investment advisors (RIA) and are required to act as your fiduciary.

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Frank Financial Advisors is an independent Registered Investment Advisory Firm (RIA) specializing in financial planning, retirement planning and investment portfolio management. We are a fee-only investment advisor.

We create comprehensive financial plans and retirement plans for our clients while also managing their investment portfolios as fee-only investment advisors. Additionally, our clients receive advice related to a wide range of important financial matters such as creating college savings plans, setup and rollover of retirement accounts, estate planning, tax planning, business ownership, most types of insurance, home refinance questions, and for special events such as weddings, funerals and elderly care.

We serve clients nationwide from our headquarters in Carlsbad, California, in North County San Diego. We serve the local communities of Oceanside, Escondido, Encinitas, Rancho Santa Fe, Vista and San Marcos.