26 Nov, 2012

You and your Investment Advisor: A bonafide relationship!


If somebody understands your finances better than you, it is your Investment advisor. In this day and age, earning money is easy but multiplying it, takes a toll on our lives. Parking your hard-earned money in the right investment avenue needs a lot of market research and a clear understanding of investor’s motives.


A layman alone can’t take the risk of investing his money on his own. He has to take the help of an established Investment advisor. An investment strategy only materializes if both the parties (investor and advisor) share a trustworthy relation.


It is a two-way channel. Investor has to reveal his true objectives of investment and his real financial health and on the other hand, an advisor is supposed to give a genuine advice to his client. Only a bonafide relation between both parties will lead to actualization of set objectives.


So, before you trust your advisor, you need to know following things about him:


Who is an investment advisor?


An investment advisor is a person who advises his clients regarding investment opportunities. He is a learned person who has thorough knowledge about the market scenario, risk-return ratio of each investment option, understands investor’s risk-tolerance power etc. Such investment advisors get compensation in lieu of giving advice to their clients. Moreover, they chalk out investment strategies for them.


Most of us think that financial planner and investment advisor are synonymous terms. But this is not true. Financial planner take cares of all aspects related to finance like retirement planning, savings, insurance, debt management, taxes etc whereas an investment advisor gives recommendations on investments in securities or debt instruments or other investment opportunities for wealth creation purpose.


Before hiring an investment advisor, make sure you ask following questions –


Experience of the advisor

Proof of previous work

Client testimonials if any

Employment history

Any license

Payment procedure

Any governing authority etc


You can get the real picture on abovementioned questions only when you personally meet your prospective investment advisor. A one-on-one meeting is mandatory between the advisor and investor for the clear understanding of each other’s perspective. An investor will get the cues about the knowledge and experience of the advisor from his behavior, tact of query handling and body language. By judging an advisor from these subtle signals, you can decide whether to hire him or not.


How these advisors get paid?


They get paid in the following manner-


Commission on the investment amount or securities

Fixed fee

Percentage of assets, they manage


But the most important thing is that the client and advisor should share a bonafide relation which can only be developed by mutual trust and understanding. Also, disclosure of material facts further strengthens the ties. If you want to hire an investment pro, contact www.ifmglobal.in and get personalized investment advice!

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