The Role of an Investment Advisor – Registered Investment Adviser

Experts from various fields hold significance due to the kind of knowledge and experience they possess in their respective domains. A doctor can access and cure a patient’s illness, likewise an investment advisor has the in-depth knowhow to tackle all your queries pertaining to monetary management. An investment advisor actively involves in your financial planning. Depending upon your goals say in ten, twenty or thirty years span, a skilled professional with right kind of licenses can help you achieve them.

Thus, an investment advisor is a professional, being a person or an organization who provides investment advice to individuals. In a few countries they need to be qualified to render services to their clients. In India Registered Investment Advisors or RIAs are registered with Securities and Exchange Board of India. Only those advisors who are registered with SEBI can only provide investment advice to investors and clients with respect to various financial products. They must abide by the RIA regulations. 

An investment advisor does many complex jobs together like the money that you need to save, the type of accounts you need, creating and maintaining a suitable portfolio taking into consideration the short term and long-term objectives. Also, certain necessary tasks like life insurance and health insurance also fall within his purview. An RIA may execute trades on your behalf or help you with completing transactions. They cater to a specific type of client, such as high-net-worth individuals or retirees.

What is the difference between RIAs and other investment advisors?

RIAs and other financial advisors aren’t practically different from each other. Stockbrokers, insurance agents, financial planners all can be considered as investment advisors. But they are not monitored by any regulations, however they too are expected to serve the client’s best interest and make decisions that will benefit their client. RIAs certainly hold an upper hand to a regular financial advisor. The standard and quality of their services cannot match any unregistered advisor. 

Role and responsibilities of an investment advisor

  • An investment advisor understands client’s financial goals and helps to form an appropriate portfolio considering various factors like his/her age, income, risk appetite and so on.
  • He does a comprehensive study of client’s current financial status and plans the savings, insurance and investment combinations for the short as well as long term.
  • It is his duty to make the client understand what the right kind is of investment is and gradually educate further about tax, insurance and other complex matters.
  • Looking at client’s relationship status, retirement goals and other obligations, an investment advisor creates the best kind of permutations and combinations to take care of all adversities.

When it comes to responsibilities, an investment advisor-

  • Does research and presents investment strategies and always puts clients’ interest first.
  • Provides financial planning and investment advisory services, for a fee.
  • Implements the plan as per the mutual decision taken with the client by explaining to them about the possible outcomes of any transaction.
  • Takes care of all applicable taxes and other rules and regulations into account.
  • They have authority over their clients’ assets and are required to uphold standards of fiduciary responsibility.
  • Explain to the client the process of selection. 
  • Do proper documentation when required.
  • Coordinating estate planning and
  • Managing client relationships.

The benefits of getting a SEBI registered investment advisor-

They are worth the fees that they charge. We are ready to pay lawyers, doctors etc.for their advice. The indirect cost of not hiring an investment advisor is quite high which we must realize.  Your lifetime savings and financial goals are undoubtedly managed better by getting a professional investment advisor rather than depending upon the advice given by family, friends or going by market sentiments.

  1. The success of investment advisors is directly related to their compensation structure. If they can satisfy a client, they get paid accordingly. They put their best efforts to keep their clients contended.
  2. They have vast experience of the market, they keep themselves updated about the changes in various rules and regulations, introduction to new products, risks and returns, the right time to enter and exit etc. Hence anybody who wants to hire them can rest assured that their money is safe with the advisor, and they are going to invest their money in the best possible manner.          
  3. They hold the certification and qualification required by the regulation to ensure that the clients get quality advice. The execution and investment advisory services are separated to reduce conflict of interest. This brings transparency during the process of investment advice.
  4. They check the suitability of the investment advice and carry a risk profiling as per guidelines.

Look out for an investment advisor but keep in mind the following points:

-Get advisors with reputable credentials

-Understand the types of financial advisors

-Use technology to fix your criteria

-Know how they charge

-Check for complaints if any, against them and how they got resolved

There is also an option to get online investment advisors. Again, that needs to be done backed by some research; and good feedback on review sites such as Google Maps.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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