What Is an Investment Advisor & Their Roles?


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We have individuals or firms that qualify in giving advice that pertains to buying and selling securities, they are investment advisors.

Sometimes investment advisor and financial advisor are used interchangeably but they are two different professions.


Financial advisors deal with managing clients’ overall financial activities. While investment advisor deals with securities and also help clients manage their investment portfolios.

Financial advisors can also be in a position to enlighten clients on issues that concerns investments. This is so because investment is a subcategory of finance.

You cannot talk about managing your personal finance without pointing out investments. On the other hand, you may solely discuss investment without having to talk about your overall finances.

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What do investment advisors do?

Investment advisors could help you choose the right investment method, manage your portfolio and achieve your financial goals. Investments, as it is, are an act of dedicating some funds to a planned project to gain future revenue.

Many times people, especially beginner investors misconceive the thought that they can all of a sudden decide to make one investment or the other.

Little did they understand that this decision could lead to investment risk. They fail to gain the necessary information regarding their choice of investment thereby taking the wrong approach

So what is the right approach?

The best approach is to hire an investment advisor; they are professionals in the field of investment. These investment experts could give you comprehensive information on your style of investment.

They can proffer to you the type of investment that fits your financial goal and advice you accordingly.  

Now because we have different types of investments and every investment comes with risk. These experts could give you guidelines and advice on how best to manage those risks.

This includes making adjustments where necessary. You could invest more funds or you may have to diversify assets in other to gain the loss of the other.

Ordinarily, the main target of every qualified investment advisor is to witness huge success for their clients. Investment advisors are also stockbrokers and they understand too well the different types of investments.

As regards opening an account, they could help you with your brokerage account, and advise you accordingly.

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How does an investment advisor work?

As an investor, you need to note beforehand that investment advisors usually charge some fees for the job they perform.

If you hire any of them, the first step the expert takes is to have a good knowledge of your financial circumstance.

This includes the amount of fund you projects and whether you will be willing to add fund if the need arises. How you intend to manage risk and push forward.

Again, how ready you are to diversify assets in other to gain the loss of the other asset. Finally, how you intend to carry out your investment project.

Now in other to prove the advisor’s competence and evidence of expertise, he or she presents a certificate of degree.


This certificate could emerge from having completed a course and being awarded a certificate in RIA, CFP, CFA, CPA, and ChFC.

This degree and skills give the investment advisor unrestricted power to carry out activities for clients even without prior consent. So far, there is an initial agreement at the start of the contract.

The role of an investment advisor

As mentioned above investment advisors give information and guidelines on purchasing and selling of securities. There are other roles they perform for their clients, which include:

They help to establish client’s investment goals

They educate their clients on how best to accomplish their investment goals. Now having had a good knowledge of the investor’s financial situation the advisor would list out all the available investment plans.

The investor would choose from the desired plan while the investment advisor advises the client on how to embark on it.

If the investor’s choice of investment does not tally with his or her financial budget then the advisor would help the investor to make a wise choice.

They create an investment strategy

It is the advisor’s role to make sure the investor’s aim and objective for embarking on a particular plan succeeds. This could be achievable by designing and working with a set of principles.

These principles could be rules or laws that guide the operation between the advisor and the investor. The principle Is based on the decision the investor makes toward achieving investment goals. The willingness to level up capital when ask to do so and risk tolerance.

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They manage investor’s portfolio

The investment advisor must enlighten his client on the need for stock diversification.

Investing in different securities at a time could create an investment portfolio and this means averting loss. It is one way of managing risk.

However, the investor may be too busy to run these investments; therefore, the advisor comes into play to manage them for the client.

They Provide up-to-date information

Investment advisors provide investors with up-to-date information about the stock market. These advisors are in a good position of knowing stock market fluctuations.

Due to demand and supply, the advisor would encourage the client to buy when the price is low and sell when the price is high.

Thus, this up-to-date information could help the investor to avoid investment risk and create more investment opportunities.

Again, apart from securities like shares, bonds, and mutual funds, advisors also provide information on other investments.

Depending on the choice the investor makes, the advisor’s role is to make a good research and give the right information.

They render third-party service for their clients

Investment advisors would consult other experts on behalf of their clients in other to provide them with the required service.

For instance, an investment advisor who possesses the certificate and skill in chartered financial analysis and has skills in managing a client’s investment portfolios. He might seek information from a chartered public consultant relating to his client’s tax payments. Hence, the investor may worry less about tax deductions.

The investment advisor can act without the consent of the investor but in line with the initial agreement to proceed with carrying out duties that will benefit the investor’s financial goals.  
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