What is an Investment Advisor?
According to the Investment Advisers Act of 1940 an investment advisor is any person who, for compensation, is engaged in the business of providing advice to others about securities. An investment advisor must be registered with the SEC or with the states where they do business and complete Form ADV which is a full disclosure of their business practices. Investment advisors are required to give their Form ADV to their clients when they sign an advisory contract. If you are considering using an advisor, you should ask to see their Form ADV before you sign a contract with them. Because all investment advisors are registered, they are often referred to as Registered Investment Advisors, or RIAs. However, just because investment advisors are required to register with the government does not mean that the SEC or any State has endorsed their business practices. Every investor should perform due diligence when selecting an investment advisor.
