Investment counsel

From CEOpedia | Management online
Investment counsel
See also


Investment Counsel, also called Investment Adviser or Financial Adviser, is an individual person or organization whose expertise and assistance in financial and investment matters is used by individuals or other organizations. An investment counsel provides advice on asset management matters that the client has or on what is better for him when it comes to potential investments. The definition of an investment counsel refers to many companies as well as people who provide services related to investment advice, including securities[1].

It is important that an investment adviser meets three elements to be called an investment adviser[2]:

  • compensation - a concept that is defined as receiving a fee for consultancy services provided to clients,
  • involvement in business matters - person provides investment advice, but it does not have to be the only activity or work of such a person, this factor can be assessed by the number and frequency of consultancy services provided, or receiving a fee for them,
  • advice on shares, bonds, investment funds and other securities.

Advisory services

An investment counsel gives expert opinions on specific investments, e.g. shares, investment funds and bonds, gives advice, creates reports and analyzes. They often manage the client's assets in terms of investment - the client allows an investment counsel to make decisions related to investing on his behalf, previously giving him authorization. An investement counsel is obliged to act in good faith and in favor of clients, using expert knowledge to help the customer in the best way possible and show the best way out of the situation. The person or organization involved in investment consulting must always be loyal to clients and inform about any problems or conflicts of interest, if any occurs[3].

Advisory services require a great deal of expertise. They are difficult to assess, as the advice provided does not allow automatic assessment of financial proposals. It is very different from buying material things like a book or a t-shirt. Investment advice can not be assessed at the time of providing it, so it is not possible to submit a complaint and get back the money. A well-educated, experienced investment adviser is able to advise his client to make the best decision for him, not to consider short-term decisions, but to focus on what is important in the long run, and also highlighting the negative and positive effects of each decision[4].

Footnotes

  1. Financial Advisory Services, 2012, p.18-22
  2. Regulation of Investment Advisers by the U.S. Securities and Exchange Commission, 2013, p. 2-3
  3. Financial Advisory Services, 2012, p.18-22
  4. Financial Advisory Services. Exploring Relationships between Consumers and Financial Advisors, 2012, p. 17-18

References

Author: Justyna Wicek