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What is an Investment Advisor?
A hundred years ago, only the most affluent Americans (think Rockefeller, Vanderbilt, etc.) worked with investment advisors to plan their wealth. Most other citizens who wanted to invest in the stock market did so through a stockbroker. In recent decades, a dramatic increase in affluence among American investors and a decline in employer-funded pension plans resulted in a whole new class of high-net-worth investors with complex financial services needs. The financial services industry recognized this development and responded with the creation of an astounding array of investment options and strategies designed to address everything from retirement planning to estate planning. Likewise, the investment advisory profession expanded to help investors sort through these options and create a personalized investment plan, custom built to address personal needs and financial goals.
With all of this in mind, perhaps the best way to explain the role of an investment advisor such as ParenteBeard Wealth Management LLC is to explain what it is not. Investment advisors are not traditional stockbrokers. A quick comparison of the typical roles of these very different financial services professionals will help clarify their roles.
The Differences Between a Typical Traditional Stockbroker and ParenteBeard Wealth Management LLC:
| Typical Traditional Stock Broker |
ParenteBeard Wealth Management LLC | |
| Goal | To sell a product | To form a long-term relationship with a client |
| Investment Objective | Buy low, sell high | Achieve client’s long-term financial goals |
| Focus | Product | Process |
| Time Horizon | Short-term | Multi-generational |
| Point of View | Based on a single investment | Based on client’s total portfolio |
| Compensation | Based on commission sales | Fee-based |
| How to Get a Raise | Sell more | Help clients increase the value of their investment assets |
| Value to Client | Helps you make a purchase | Helps you plan for the future |
| Required Skills | Sales | Thorough understanding of the concepts, practices, strategies, investment vehicles, and statistical realities of long-term investing. |
| Method of Building Practice | Promote “hot” products | Provide excellent service to earn referrals |
The above represents general qualities which may or may not be appropriate for every stock broker or investment advisor. ParenteBeard Wealth Management LLC is an investment advisory firm registered with the United States Securities and Exchange Commission. It has offices in Hanover, Lancaster, Wyomissing and York.
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Last Update - 9/29/2009. Any comments or suggestions can be directed to the Webmaster.