A state-registered adviser that accepts $500 of advisory fees as a prepayment covering the upcoming 6 months is considered to have taken custody of client funds.
Registered investment advisors (RIAs) manage the assets of individual and institutional investors. RIAs must register with the U.S. Securities and Exchange Commission (SEC) or a state regulatory agency, depending on the value of assets under the RIA's management. RIAs generally earn their income through management fees, calculated as a percentage of a client's assets under management by the RIA. Unlike broker-dealers, RIAs have a fiduciary duty to put the best interests of the client first.
Learn more about the state-registered advisers here:
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