Advisory Management

Reviewed by Sweta | Updated on Sep 30, 2020

Introduction

Advisory management refers to the activity of providing investment advice or financial advice. The entire process of managing assets or portfolios forms part of the activities under advisory management. Individuals, investment firms, and corporates often obtain consultancy services for managing investments and making investment decisions and alterations to their portfolios.

Understanding Advisory Management

Advisory services are part of regular business for professionals who may be individually freelancing for clients, advising and managing portfolios. Many professionals may constitute themselves as a partnership firm or a limited liability partnership or a corporate to provide investment advisory services.

There are quite a few boutique investment advisory service firms which specialise in providing advisory services. The professionals carry degrees in finance, diploma in portfolio management, investment banking, and advisory services. The advisors interact with clients, understand their personal financial needs and risk appetite, and frame investment advice.

Advisory management also focuses on continuous monitoring of the performance of the portfolios or assets managed. The investment advice includes providing investment guidance, choosing investments which suit the financial needs and goals of the client and advising on a reshuffling of portfolios. Hence, the professional should work with data and technical analysis and make objective recommendations to a client.

The advisory services are paid by way of a professional fee or a commission based on the assets managed. In certain cases, many banks and insurance firms also offer investment products. The products include mutual funds or unit-linked insurance plans. The products are market-linked and hence need expert advice on the risk and return.

Conclusion

Advisory management includes a variety of management services, such as portfolio management, corporate debt management, and estate planning. The investment advisors also take into account the tax effect of investment decisions and calculate the effective return on the investments.

The advisors should clearly mention the advantages and disadvantages of an investment decision. Investment advisors provide pieces of advice on particular business transactions—for example, the probable results of making a private equity investment in a small-cap or mid-cap company.

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