Introduction
Investment advisors are referred to as stockbrokers. These are the individuals or group of individuals that offer investment recommendations by analysing the recent performance of securities. Investment advisors provide their services in exchange for a fee.
They earn either through directly managing the assets of their clients or by means of publications. The government of every nation has its own precise definition of investment advisor and are governed by certain laws.
In India, individuals must clear certification examinations such as the NISM, and CFA in order to become a professional investment advisor, and must compulsorily be registered with the Securities and Exchange Board of India (SEBI). The terms investment advisors and financial advisors can be used interchangeably.
Example
An investment advisor should make sure that the transactions of his or her client is given utmost priority, and all recommendations given to them should be tailored for their requirements and risk profile. Investment advisors are mandated to avoid any kind of scenarios that result in conflicts of interest.
A way in which the investment advisors work towards restricting perceived or real conflicts of interest is by structuring their compensation. Financial advisors are paid a fee, which is dependent on the cause of their success as linked with that of their client. This will ensure that the clients’ interest is given utmost importance and other things are going to fall in place automatically.
