Securities supervision involves both the question of who should carry it out and how it should be done. Investors have the option to choose between several agencies for this purpose, the most important of which are:
- The investor himself.
- Your commercial bank.
- An investment brokerage or Investment Bank.
- The consulting department of a large trust company.
- Independent investment advisory or supervisory service.
The last two agencies charge fees for their services, while the previous three provide advice and information free of charge.
Commercial Bank Advice
You should not be your sole advisor unless you have sufficient training and experience to qualify you to advise others professionally. In most cases he must at least supplement his own judgment through consultation with others. The practice of consulting the bank about investments is widespread and is, without a doubt, of great benefit, especially for smaller investors. If followed consistently, it would offer almost complete protection against the wiles of pushy investment salesmen and their worthless "fanciful promises."
It is doubtful, however, whether the commercial banker is the most suitable advisor to an investor with resources . Although his judgment is generally sound, his knowledge of securities is likely to be superficial, and he cannot be expected to take the time necessary for a comprehensive analysis of the portfolio and potential issues with each investment .
Investment Banking Advice
There are objections of another nature to the consultancy service of an investment bank . An institution with its own securities to sell cannot be considered a completely impartial source of guidance . No matter how ethical your goals, the imperious force of self-interest tends to affect your judgment.
Investment Consulting Advice
While the idea of providing investment advice for a fee is not new, it has only recently become an important financial activity. Currently, this work is carried out by specialized departments of large trust companies , or by a statistical services division, and by smaller private companies that call themselves investment consultancy, or investment advisory.
The advantage of these agencies is the possibility of being completely impartial, as they are not interested in selling any securities or in commissions on their clients' transactions.
What prevents many investors from following this Investment Supervision model is the cost of the service, which is charged upfront. However, when the consultancy is well selected, it provides the investor, whether medium-sized or larger, with results beyond those that traditional banks can offer.
Keywords:
#equity #volatility #pay-out #risk #return #share market #variable income #fixed income #derivatives #commodities #focusongain #financialmarket #investors #stockholdings #returns #diversification #assets #portfolios #macroeconomicanalyses #microeconomicanalyses #profits #companies #investments #funds #trading