Who is referred to as an Investment Advisor (IA)?

Who is referred to as an Investment Advisor (IA)?

• A. An individual licensed to transact in securities and provide advice
• B. A representative selling only mutual funds
• C. A manager overseeing investment funds
• D. An investor directly managing their own portfolio

Answer: (A)

An Investment Advisor (IA) is defined as an individual or firm that provides financial advice and manages investment portfolios for clients, usually for a fee. They are licensed professionals who can transact in securities and offer comprehensive advice regarding investments, including strategies for asset allocation, risk management, and specific security recommendations based on the client's financial goals and risk tolerance.

This role requires adherence to regulatory requirements, ensuring compliance with the laws governing investment advice. Therefore, the correct response highlights the broad capabilities of an Investment Advisor, which extends beyond merely selling products or managing funds; it encompasses the provision of tailored investment strategies and ongoing portfolio management to facilitate clients' financial objectives.

In contrast, other choices focus on narrower roles; selling mutual funds or simply overseeing funds lacks the comprehensive advisory function. Managing one's own portfolio does not qualify for the IA designation, as it implies a personal, self-directed investment approach rather than providing services to external clients.