What Is An Investment Advisor?

An investment advisor is a person who gives advice about investments and who is regulated by either the SEC or a similar State regulatory authority. A regulated advisor has to have a form ADV which details important information about the advisor, his business and his clients. Any regulated investment advisor must act on the client’s best behalf; this is called acting in a fiduciary capacity. Registered advisors must do what is best from the client’s perspective and put the client’s needs first.

It is important to understand how investment advisors charge. Many charge on a percentage of assets basis, a flat fee basis or some charge on a commission basis. How much you are spending every year to have your money professionally managed will directly affect the portfolio returns you will experience so it is important to know this before you hire an advisor.

Before hiring a manager, an investor will want to understand what kind of investments the advisor will be purchasing and what process the advisor uses to determine what investments are purchased for each investor. The investor will want to know how much risk the advisor will be taking in the portfolio so as to understand how the investments are performing given various market environments. The more the investor knows beforehand, the more realistic expectations will be towards the advisor’s performance.

Many advisors also hold special designations that add to their credibility as expert in investments. One of these is the Chartered Financial Analyst designation, which is world renowned for expertise in investing practices. The CFA Institute administers the designation and is also the leading authority globally for research about investing. Designation holders must pass three exams and have a minimum numbers of years investment experience. The passing rate on the Level 1 Exam is around 35-40% only with 100,000 people taking the exam each time it is given only twice per year.

Not everyone can call themselves an investment advisor. Investors should understand what they are getting when they hiring someone to handle their investments.

For local NY based information, you may visit this website - Investment Advisors In NY.