An Investment Advisor (IA) is a firm or individual engaging in the business of advising other firms/individuals to value the prudence of purchasing, selling and investing financial securities. A certified Investment Advisor is registered under regulatory agencies such as the Securities and Exchange Commission (SEC) and they are paid according to the: 1) Percentage of the assets managed and 2) Fixed fee for the number of hours they spend while working.
Two Types of Investment Advisor
Registered Investment Advisor is responsible in providing investment advices to companies endorsed by the SEC. A Registered IA must be under investment companies offering “Exchange-Traded Fund” and “Mutual Fund” services. Unregistered IA meanwhile refers to Investment Advisors that are not registered with any professional states agency. Unregistered IA’s only prioritize investment advice to privatized capital pools known as “Hedge Equity Funds”.
Becoming an Investment Advisor
Working as an IA is becoming more popular in many first-world countries today. One of the main reasons is that the monthly compensation is given through
“Fees vs. Commission”. Fee-based compensations allow the IA to rely on commissions guaranteed by full service brokers or mutual fund managers. Registered IA’s have more advantages in generating revenues and producing investment plans. If you’re considering the cutthroat job of becoming a registered IA, here’s how:
– Review and prepare for the Series 65 examination. Tip: Acquire for a Series 65 Completion Form (U-10) at any Financial Industrial Regulatory offices in your community.
– Pass the Series 65 for “Practicing Investment Advisor” qualification.
– Once you already passed the Series 65, you are required to remit an application fee (annual-based) from business state agencies.
– Become a member of the SEC by submitting Form 1 of the ADV Disclosure Document online followed by Form 2 that must be submitted via snail mail.
– Search for any legal companies offering free training programs. Note: If you’re a practicing Investment Advisor, it’s a huge advantage.
– Look for any investment companies giving higher starting commissions or salary. Higher commissions or fees are typically given to IA’s with exceptional performance in making their list of clients grow.
– As much as possible, look for part-time jobs provided by banks. Many successful IA’s actually started as “Tied Advisers” to bank-related duties. Considering a part-time job at any bank will give you a productive experience in dealing with various clients and earning extra income. Several banking companies are providing financial support among those who are undergoing professional examinations.
– Having a higher university grade is important. Majority of investment companies are prioritizing Business-related degree holders with an average grade of 3.2 or higher.
– Undergo special exams annually in order to keep you updated with the latest in financial developments.