The difference between a financial and an investment advisor

Investment Advisor is either a firm or an individual that provides advice or guidance to its clients regarding securities (financial).

It guides and advices on securities such as investment in stocks, bonds, mutual funds, or exchange traded funds are investment advisers. Some investment advisers manage portfolios of securities.

The main difference between an investment advisory and a financial planner is that almost all financial planners are investment advisers but not all investment advisers are financial planners. Some financial planners assess every aspect of an individual’s financial life which includes savings, investments, insurance, taxes, retirement and in some cases estate planning as well. After their assessment, they help the individual to develop a detailed strategy, insurance, taxes, retirement and estate planning.

They also help you to develop a strategy or a financial plan for meeting your day to day financial goals.

Before hiring the services of any financial professional, one must know what kind of services is exactly required and what kind of a background does the financial professional hold. After all you are going to invest your hard earned money therefore it is very necessary for you to know everything about your investment advisory.

1)            To how many people do you provide advices regarding investments?

2)            What is your educational background?

3)            With which stock broking organization are you associated with?

4)            Which are the licenses you hold?

5)            What products and services do you offer?

6)            What is the commission that you charge for your services?

Also one needs to know how the investor advisers are paid in order to make better use of the services that are provided to them.

1)            A percentage of the total value of the assets that they manage for you.

2)            An hourly or daily fee on the basis of their handling of your work.

3)            A fixed fee for the services that they offer you.

4)            A commission on the basis of the securities that they buy/sell for you.

5)            A small combination of everything mentioned above.

All the compensation methods have potential benefits and possibly drawbacks, based on your individual needs. You must ask the investment advisory to explain you all the differences thoroughly before you do any business with them.

One must also ask if these service fees are negotiable or they are a onetime fixed amount. Based on your needs and requirements, the investment advisers will provide you with various strategies that will cater to your financial needs.