Trust Algorithm

investor.com

Written by investor.com

February 08, 2024

500,000+ data points. 100% consumer advocacy. Helping Americans find a financial advisor that they can trust.

Our searchable database of U.S.-based financial advisors includes more than 17,000 firms across the country. Each month, investor.com downloads the latest regulatory data from the SEC IAPD database. This data is then run through our proprietary Trust Algorithm to generate a star rating for each firm based on a variety of measures, including disciplinary history, conflicts of interest and years in business.

As a Certified B Corporation™, our focus is simple: people before profits. Each month, investor.com serves as a trusted resource to help thousands of Americans research and compare financial advisors.

What data is used?

Our primary data source is the Securities and Exchange Commission (SEC) IAPD Database.

Data checks begin at the start of each month and take several weeks to complete.

SEC IAPD database website homepage

Here's a summary of the regulatory and proprietary data we collect to rate and review Registered Investment Advisor (RIA) firms.

Background

  • Years Registered (SEC IAPD)

Conflicts of interest

  • Attorney Conflict (ADV Part 1 Items 6.A.13, 7.A.11)
  • Broker/Dealer Conflict (ADV Part 1 Items 6.A.1, 7.A.1)
  • Commissions Compensation Conflict (ADV Part 1 Item 5.E.5)
  • Insurance Agency Conflict (ADV Part 1 Item 6.A.6)
  • Insurance Affiliation Conflict (ADV Part 1 Item 7.A.12)
  • Private Investment Management (ADV Part 1 Item 8.B.2)
  • Proprietary Investments (ADV Part 1 Item 8.A.3)
  • Soft-Dollar Benefit Conflict (ADV Part 1 Item 8.G.1)

Disciplinary history*

  • Activity Restriction (ADV Part 1 Item 11.E.4)
  • Attorney/Accountant Authorization Revocation (ADV Part 1 Item 11.F)
  • Business License Revocation (ADV Part 1 Items 11.C.3, 11.D.3, 11.E.3)
  • Court-Ordered Investment-Related Prohibition (ADV Part 1 Item 11.H.1.A)
  • False Statements or Omissions (ADV Part 1 Items 11.C.1 11.D.1, 11.E.1)
  • Felony Convictions or No Contest Pleas (ADV Part 1 Item 11.A.1)
  • Investment Related Dismissal upon Settlement (ADV Part 1 Item 11.H.1.C)
  • Misdemeanor Conviction (ADV Part 1 Item 11.B.1)
  • Monetary Penalty (ADV Part 1 Item 11.C.5)
  • Orders Entered (ADV Part 1 Items 11.C.4, 11.D.4)
  • Registration/License Revocation (ADV Part 1 Items 11.D.5)
  • Regulation Violations (ADV Part 1 Items 11.C.2, 11.D.2, 11.E.2, 11.H.1.B)

*Disciplinary actions may have been brought by the SEC, CFTC, a self-regulatory organization (SRO), a commodities exchange, other regulatory agencies, or a domestic, foreign or military court.

Which firms are included on investor.com?

Our searchable database of U.S. financial advisors represents more than 17,000 firms across the country. To qualify for inclusion in our database, firms must meet the following criteria:

  • Actively registered with the SEC or a state, per their SEC IAPD page
  • Located in the U.S.
  • Provides financial planning services and/or portfolio management for individuals and/or small businesses
  • Charges compensation that is fee, hourly, or commission
  • Has at least one client
  • Has at least $1 in regulatory assets under management (AUM)

Research findings

Our experts spent more than six months researching and analyzing our database of 17,000+ U.S. financial advisor firms. Investor.com’s Annual Awards 2024 spotlight winners for Best Financial Advisor Firms across three categories:

Infographic: Conflicts of Interest at Financial Advisor Firms — Data from investor.com shows that disciplinary history and conflicts of interest are much more common at a specific type of financial advisor firm — which could put your money at risk.

"99.2% of all financial advisors barred from the industry have been either a broker or dually registered advisor." (investor.com, dataset source: FINRA, June 2020)

"In a study assessing 7,079 SEC-regulated Registered Investment Advisors (RIAs) over a 12 month period, 24.8% of firms offered funds with 12b-1 fees." (investor.com, dataset source: SEC, July 2019 to June 2020)

"In an assessment of 16,500 federal and state Registered Investment Advisor (RIA) firms, 2,157 (13.1%) have a broker-dealer conflict." (investor.com, dataset source: SEC, July 2020)

"In a study assessing 16,411 Registered Investment Advisors (RIAs), total AUM was $51.4 trillion, of which 99.5% is managed by SEC-registered firms." (investor.com, dataset source: SEC, July 2020)

Trust Algorithm summary

  1. First, we collect all publicly accessible data made available by the Securities and Exchange Commission (SEC) IAPD Database.
  2. Then we filter for data points that are incorporated into the Trust Algorithm.
  3. Firm data is then sorted and weighted individually based on its significance and the net impact on Americans.
  4. Once all the data is collected, sorted, and weighted, the Trust Algorithm goes to work to determine an Overall star rating for each firm.

Search best firms by state

Select a state to view a full list of top-rated registered investment advisor firms (RIAs), located in that state.

Financial advisor education

Read our introductory course to learn how to find the best financial advisor for your situation.




The “investor.com Star Rating Badge” is only available to RIA firms participating in investor.com’s paid subscription-based program and earning a 4.5 to 5 star review from investor.com; participation in investor.com's paid subscription-based program does not guarantee being awarded an “investor.com Star Rating Badge”. For more information on how investor.com rates and reviews RIA firms, please see the Algorithm page.

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