Individuals interested in investing their money to make more money often seek the assistance of investment advisors. Investment advisors are trained professionals who provide financial advice to clients and help them decide which the best investments are. They also go under the titles of asset managers, investment managers, portfolio managers or investment counselors. Whatever title they choose to go by, their role is important because it can mean the difference in a person gaining or losing money. Here is an overview of investment advisors.
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What are Investment Advisors?
Investment advisors are trained professionals who are paid to provide financial advice about securities and potential investments. Although investment advisors are often referred to as financial advisors, they’re not the same thing. Financial advisors are brokers who offer financial advice, whereas investment advisors are either a company or an individual who is registered as a state security regulators.
An investment advisor will gather financial information on the client to determine his or worth and to determine the client’s financial goals. After gathering this information, investment advisors inform the client on what is required regarding fees and/or commission and provide information on potential investments the client can make to meet his or her financial goals. Investment advisors not only offer professional financial advice but can also manage a client’s investment portfolio.
How to Become One
Investment advisors usually have a bachelor’s degree in finance, business, accounting, economics or law. Students in these programs typically take courses in estate planning, risk management, financial planning, taxes and investments. Many training programs also require the student complete an internship working under the supervision of senior advisors so the student can obtain hands-on training on developing investment portfolios and building a client network. This on-the-job training can take a year or more to complete.
Although investment firms may not require their investment advisors to have a bachelor’s degree, the individual must have sufficient, training. Investment advisors must obtain certain certifications or registrations. Registration requirements may vary from state to state. Candidates can obtain specific information on state licensing requirements from the North American Securities Administrators Association.
Investment advisors may also choose to become financial advisors. To obtain the title of Certified Financial Advisor (CFA), the individual is required to have a bachelor’s degree, at least three years of relevant work experience and must pass a certification exam.
Are Investment Advisors Regulated
Investment advisors must be registered, but where they register is determined by the amount of client assets (money) they manage. Investment advisors working in the U.S. are required to register at the state level if they manage less than $100,000 in assets. Those who manage more than $100 million are required to register with the Securities and Exchange Commission (SEC).
Additionally, investment advisors are required to uphold standards of fiduciary responsibility. What this means is that the investment adviser must act in the best interest of the client. For instance, a financial advisor might advise a client to purchase a certain stock or security because it will benefit the financial advisor and fit in well with his portfolio even if it’s not what the client might need. Investment advisers can only promote securities that are in the client’s best interest financially.
Working as an investment advisor can be very rewarding and lucrative. Imagine the satisfaction of knowing you’re not only making wise investments that help you financially but also that help others make money!
