Among Registered Investment Advisors (RIA) a shift is taking place. An increasing number of RIA firms are beginning to charge on an hourly basis.
Why is this good for some investors? Because it allows smaller clients to get the kind of professional investment advice that was once reserved for those with larger portfolios. Most RIAs charge fees based on a percentage of client assets under management. On that basis, the RIA could not afford to give the small client or the individual with only a 401(k) the kind of attention he or she deserved. By charging hourly fees the RIA can afford to provide personal service and advice on a discreet basis.
Because of this flexibility, the RIA will become increasingly important to the small and/or beginning investor, helping build their portfolios until they grow enough to join the “big leagues.”