Money Manager, Investment Advisor or Broker?

As a new investor, one of the important decisions to make is whether to use the services of a money manager, investment advisor or a broker? All of these entities offer services tailored to the individual investor.

MONEY MANAGER:

i) Who is a money manager?

A money manager, as the name suggests, manages the money of several individual investors. A money manager can be an individual or a firm. Individual money managers are often experienced investors who typically manage the funds of friends and family. Institutional money managers offer their services to both individuals as well as institutions.

ii) What are the services offered by a money manager?

Money managers charge a fixed annual fee for their services and may also charge an additional commission on any profits accrured. They may also offer downside protection by guaranteeing a minimum return on the invested amount.

iii) Who should use the services of a money manager?

A money manager’s services is useful for individuals who wish to invest in the markets but do not have the time and expertise to follow up on a regular basis. Risk averse investors can opt for investments in money management funds of large banking institutions.

INVESTMENT ADVISOR:

i) Who is an investment advisor?

An investment advisor is an individual who offers investment advisory services to clients. An investment advisor can be an independent or can work for a firm.

ii) What are the services offered by an investment advisor?

An investment advisor offers a variety of services like designing an investment portfolio based on the client’s profile, recommending stocks to buy or sell, recommending different financial products like insurance, stocks, bonds, mutual funds etc.

Investment advisors typically have access to sophisticated tools and research and are hence in a position to provide a better insight to clients.

iii) Who will benefit from the services of an investment advisor?

An investment advisor’s services are useful for clients looking for additional information and advice to support their investment decisions.

BROKER:

i) Who is a stock broker?

A broker is an intermediary between the client and the exchange. Exchange traded stocks, bonds and derivatives can only be bought through a stock broker.

ii) What are the services offered by a broker?

A broker could be a regular brokerage firm or an online brokerage firm. Brokers sometimes offer minimum advisory services like research reports and market updates to clients.

iii) Who will benefit from a broker’s services?

A broker’s services is sufficient for experienced traders and investors.