Our Rating Criteria

How We Define Each Criterion

Our rating criteria are designed to be fully objective, fully traceable to public data, and applied uniformly to every SEC-registered RIA regardless of firm size, location, or any commercial relationship with AdvisorForInvestors. The following describes each criterion, its weight in the AFI Score, and how it is assessed.

Fee Structure 30 Points

Fee structure is the highest-weighted criterion in our methodology because it is the most reliable indicator of whether an advisor's financial incentives are aligned with their clients. We assess this criterion based on the compensation disclosures in Form ADV Part 2. A fee-only firm that earns no commissions and receives no third-party compensation earns the full 30 points. A fee-based firm that earns both client fees and product commissions earns a partial score. A firm that earns primarily through commissions earns zero points on this criterion.

Disciplinary History 25 Points

We review all regulatory disclosures in Form ADV Part 1 Schedule D, including formal regulatory actions, civil proceedings, criminal charges, and customer complaints. A firm with zero disclosures earns the full 25 points. Minor disclosures that have been resolved receive a partial score. Active or serious disclosures result in zero points on this criterion. We do not make subjective judgments about the severity of disclosures our scoring is based on the presence and resolution status of disclosures as reported in the regulatory filing.

Transparency 20 Points

We assess the completeness and specificity of Form ADV Part 2 disclosures, evaluating whether the firm provides a thorough and detailed description of its services, fees, conflicts of interest, and investment personnel. Firms that file complete, specific, and clearly written brochures earn the full 20 points. Firms with sparse, vague, or incomplete disclosures earn a reduced score.

Years in Operation 15 Points

Longevity in the registered investment advisory industry is a meaningful signal of operational stability, client retention, and regulatory compliance. We award points based on the number of years a firm has maintained continuous SEC registration. Firms with over ten years of registration earn the full 15 points. Firms with five to ten years earn a partial score. Firms with under two years earn zero points on this criterion.

Client Accessibility 10 Points

We evaluate the ratio of assets under management to the number of clients, using this as a proxy for whether the firm primarily serves institutional or ultra-high-net-worth clients or is genuinely accessible to everyday investors. Firms with lower average account sizes score higher on this criterion. This reflects our belief that independent ratings should serve the interests of all investors, not only the wealthiest.