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The Importance of the Investment Advisor
In these days of difficult times, investment advisors are springing up more often than foreclosures. So how does one judge an investment advisor? What does an investment advisor do, and more importantly how do I avoid the rip off artists?
Seeking an investment advisor is most probably one of the most important decisions you may make in these dismal times. A financial investment advisor holds court with a myriad of items such as stocks, bonds, and mutual funds in order to rein in the most advantageous investments available, and in doing all this, he must stay ahead of other investors in order to buy at the correct time, and sell at the precise time needed. In effect an investment advisor is a researcher extraordinaire. If he’s not, then he will not be successful. Some investment advisors hire other investment advisors and thus form a corporate entity that acts as an investment advisor in a professional manner.
Whether they are a single entity or a corporate entity, an investment advisor offers express financial advice to either businesses or individuals. Corporate clients, though, may need an investment advisor to act in the capacity of an asset manager.
An SEC (Securities Exchange Commission) Registered Investment Advisor who can provide verified records of performance through prudent investments in stocks, mutual funds, and bonds is what you are recommended to seek. Regular stockbrokers are not normally registered investment advisors. They are registered stockbrokers but cannot perform the duties that an investment advisor can act upon. Some investment advisors also act as pension fund managers.
Further you should be aware that the registration procedure to become a registered investment advisor is apt to be increasingly complex. The stringent examination requirements are extremely daunting as are the augmented state regulations.
Being an investment advisor means that the advisor owes his clients a fiduciary duty (total trustworthiness) to disclose all fees, any conflicts of interest, and if they are authorized by their clients, to exercise the utmost discretion in making investments. They must always strive to keep their client’s best interests ahead of their own.
A certified investment advisor may also have earned various other designations that they proudly wear behind their name. Some of these are IAR, CPF, and CFA. These are only mentioned so that you can ask their meaning from your investment advisor. Regardless of their designations, certified investment advisors must not only pass stringent exams, but they also need to attend mandatory education courses and adhere to a strict code of ethics.
Dealing only with certified investment advisors will protect you from unscrupulous shysters who will not treat you with the knowledge and expertise that a certified investment advisor is held to. If you have suspicions feel free to contact the SEC. Their address and phone numbers are easily available online with a modicum of searching.
Finally you should be aware that investment advisors will charge you fees that are either calculated as a percentage of assets invested, perhaps as an annual fee, or even a flat fee. It behooves you to ask first prior to investment. You should always conduct sufficient research when dealing with an investment advisor, a finance broker or anyone else who handles your money.