How Will An Investment Advisor Determine Which Financial Instruments Are Right For Me?

The consultant can conduct an expert assessment of the existing investment portfolio, provide an analytical assessment of the market situation.

The responsibilities of the consultant include not only offering their own ideas, but also taking into account the interests of the client, his situation and personal preferences.

The consultant draws up an investment plan, prepares all the necessary documentation, and oversees the process until the result is obtained. For his services, the consultant receives either a percentage of income or a fixed fee.

Ideally, a consultant is an advisor who can explain the complex aspects of investment activities to the client in an accessible and understandable language.

However, the consultant cannot give any guarantees, since stable profit is not guaranteed, in principle, in any area of ​​activity. The market, the political situation, current and force majeure circumstances always influence.

There are few independent investment advisors on the market. As a rule, they work in investment companies and banks, and are interested in the client investing in a particular company, unit investment fund (mutual investment fund), and bank.

However, representatives of brokers are convinced that the main criterion of efficiency is the established reputation of consultants in the market.

It is beneficial for brokers and investment managers to build long-term partnerships with clients, and in the long term, an ineffective investment strategy will reveal itself. Therefore, consultants, in principle, cannot offer investment products that are disadvantageous for the client, but profitable for the company.

To begin with, top investment services company will draw up your investment profile. This is a document that will state:

• How much are you going to spend on investments;
• For how long do you plan to invest money;
• What profitability are you counting on;
• What maximum losses are you willing to accept?

In addition, the investment adviser will enter in the document information about your age, education, knowledge and experience in investing, average monthly income and expenses for the last year, total savings, data on loans and borrowings. The advisor will try to find out what kind of risk you are ready for.

When the investment profile is ready, you must agree on it. Before signing the document, check if all your details are correct. And only after that, the advisor will prepare a recommendation on which financial instruments you should invest money in.

The advisor is not obliged to verify the accuracy of the information you provided to him. However, it is in your interests not to dissemble, but to give him real information. Otherwise, his advice may harm you.

The more free money you have, the more different financial instruments the advisor will be able to recommend. At the same time, he himself determines which of them are more risky, and chooses those that match your investment profile.

What is included in an investment recommendation?

Investment advice will indicate certain securities or derivative financial instruments, their quantity, approximate transaction price, investment period and validity of the recommendation. Sometimes the advisor gives recommendations on where exactly it is worth making a deal (for example, on an exchange) and even through whom (for example, through one of the top 10 investment services companies).