The term “RIA referral agreement” refers to a legal document or contract that outlines the terms of an agreement between two Registered Investment Advisors (RIAs). The purpose of this agreement is for one RIA to refer clients to another RIA, usually with the intention of expanding their business or providing additional services to their clients.

One of the primary benefits of an RIA referral agreement is the ability for RIAs to partner and share resources. This can include sharing marketing materials, client lists, and expenses for events or seminars. It also allows RIAs to tap into each other`s areas of expertise and offer a wider range of services to their clients.

However, before entering into an RIA referral agreement, it`s important to understand the legal implications and potential risks involved. RIAs must ensure that they are complying with all regulatory requirements, including disclosing any compensation or fees associated with the referral agreement.

Additionally, RIAs must be careful not to violate any SEC rules regarding advertising or solicitation. For example, RIAs may not use testimonials in their marketing materials, and they cannot make any guarantees or promises about investment returns.

To ensure that an RIA referral agreement is in compliance with all regulations, it`s best to seek the advice of legal counsel and an experienced compliance professional.

In summary, an RIA referral agreement can be a valuable tool for RIAs to expand their client base and offer additional services. However, it`s important to carefully review and understand all legal requirements before entering into such an agreement. With the proper due diligence and compliance measures in place, an RIA referral agreement can be a mutually beneficial arrangement for all parties involved.