Debt Dictionary

Investment Advisor

Investment Dictionary -> Investment Advisor

Recently, more and more companies need to use the services of investment advisors in order to expand their business. So, questions emerge about these experts- how they function and what is the best way to choose one.

The investment advisor is an individual or a company that gives advices to clients about securities in investment matters in a professional manner. They are mainly asked for advice on how to invest in stocks, bonds, mutual funds, etc. In return, they receive compensation.

Generally, there are two categories of investment advisors: investment advisors who offer financial advice to persons or legal entities; and, investment advisors who provide asset management that is intended to corporatations.

If you expect to receive a good and profitable advice from an investment advisor, you must give at his disposal the required personal and financial information about your company. In this way, the data will be used to analyze the situation of your investments. He will recommend possible routes of action with regard to these investments. The advisor must be aware of your your financial goals, your tolerance of risk, and your expected rate of return on the investments.

Here are some of the basic types of advices an investment advisor can provide:

What types of assets to invest in;
Whether it is best to invest in stocks or to buy mutual funds;
Which types of investments to employ in your retirement accounts;
What risks come up with each investment;
Which portfolio will bring the intended rate of return;
What type of investments you must own in the form of non-retirement accounts;
What types of taxable income will be generated;
How to rearrange investments in order to reduce the amount of taxable income;
Taxes accrued while trading investments.

Finally depending on the nature of the relationship, investment advisors charge fees, calculated as a percent of the assets that he manages on an annual basis, an hourly or alternatively, on a "flat fee" basis.


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