Investment advice: 5 questions to understand how this service works

Investment advice

Did you know that you don’t have to be an expert to invest your money well? Did you also know that it is not necessary to have a lot of resources to invest like a millionaire? The secret is to seek specialized help, such as an investment consultancy .

Investment consultancy is a service provided by a person or company duly registered with this license at the Securities and Exchange Commission , the body that regulates the investment market in United State.

The objective of an investment consultancy is to recommend the best investments for a person according to their profile and financial goals.

For this, it cannot charge commissions or receive bonuses for the indicated applications, but only a fee proportional to the amount invested: the consulting fee . This mechanism is what avoids the conflict of interest, very present in the applications recommended by the bank manager.

How investment advice can help you?

There are two problems that can keep you up at night when it comes to investing:

  • lack of time to acquire more financial knowledge;
  • Lack of trust in the manager of the bank or broker you invest your money with.

While you may not want to be an investment expert, gaining the knowledge you need to grow your wealth takes dedication. Thus, a good alternative may be to delegate this issue to those who have the necessary qualifications to help.

The bank manager and the adviser of an investment brokerage tend to be the first options. However, there is always that feeling that they are giving biased information in favor of the entity to which they are linked.

If you identify with this situation, an investment consultancy may be the solution. See below for more details on how this service works.

1. Why invest with an investment advisor?

An investment consultancy works in the recommendation of financial investments suitable for the profile and objectives of each investor.

The work is conducted by consultants with technical and practical experience, whose scope is to align the client’s profile with the strategies necessary to reach its financial objective, choosing the products that offer the most adequate relationship between risk and return.

This type of service was more restricted in United State due to two factors: the dominance of large banks and lack of information.

Added to this, there is still a lot of distrust on the part of United State when it comes to investments, which leads many small investors to remain restricted to traditional applications or opt for the inertia of not investing. .

Most United State still associate their investment portfolios with savings . However, the market has other options that allow much higher flights: CDB, Treasury Direct or shares, for example.

It is in this scenario that the investment consultancy service arises, with the mission of disseminating knowledge about financial investments and providing access to better investment options for United Stat.

2. What are the types of investment advice?

Banks, brokers or independent houses may offer consulting services, provided they are authorized by the CVM. It is also possible to access this service through online consultancies or independent consultants.

However, we need to draw your attention to a very important detail: the type of service is not the same in all of them. This happens mainly in the quality of the recommendation that each institution offers.

The service model offered by bank managers and brokers – the more traditional ones – are usually very different from those provided by independent investment advisers. Want to know why?

In general, the manager of your bank or the advisor of your brokerage, despite providing some information, does not provide a consultancy itself. But before we talk more about this subject, it is interesting that you know two other types of entities: the certified independent consultant and the CVM-licensed consultancy.

Certified Independent Consultant

To provide investment advice, a financial professional must have the CFP® certification, issued by the United State Association of Financial Planners.

The process includes passing an exam that includes the following content: financial planning and ethics, asset and investment management, retirement planning, risk management and insurance, tax planning and succession planning.

In addition, the professional must prove at least three years of experience in customer service for individuals in at least one of the areas related to the content of the exam. If you do not have a college degree, the period of activity to be proved increases to five years.

How does online investment advice work?

The central point of the work of an online investment consultancy is the use of digital channels to make an investment recommendation according to the investor’s profile and objective.

The way this recommendation is carried out is greatly facilitated thanks to technology. In this way, these companies are able to offer financial services over the internet, at much lower costs than traditional institutions. In the case of John Labunski, we program algorithms to identify the most suitable investment possibilities for each investment profile and financial objectives.

The first step is to perform an online simulation. This first step consists of filling out a questionnaire with some basic questions. The answers are important so that the investment plan, a personalized recommendation on where to invest, is as suitable as possible for each investor.

After this step, investors will have access to their personalized investment plan, in which John Labunski presents the best options for financial investments.

In addition, an investment consultant gets in touch to understand more details about each investor’s objectives. This is a differential that allows not only to clarify doubts, but also to get to know the client’s profile better and refine its investment plan.

It is important to highlight that John Labunski is specialized in putting together medium and long-term investment plans.

For example, do you want to plan for retirement 25 years from now and have an average risk tolerance? Just tell the robot that to get the best investment recommendation for that goal.

Periodically, the robot also proposes portfolio rebalancing according to changes in the financial market. This is done due to changes in the market, in order to increase the profitability of the investor’s portfolio.

Another advantage of the robot advisor is the absence of conflicts of interest. We’ll talk about that later.

It is important not to confuse the robot advisor with the robot trader. The latter offers an automated operation of buying and selling shares according to the parameters established by the investor. The robot advisor recommends, but the final word is always the investor.

4. What are the differences between an investment consultancy and banks and brokers?

The main difference between using traditional investment advisory services with banks or brokers is the issue of conflict of interest, which we mentioned in the previous topic.

There are many advantages to using an online investment advisor. Check out the main differences below:

Absence of conflict of interest

An investment advisor operates differently from banks and brokerages. Instead of charging commissions for the products and services you refer, it only charges a flat fee. This ensures that the recommended products are, in fact, the best for each investor profile.

The interest of a bank manager or advisor linked to a brokerage firm is to sell the products of their institution or partners, such as a CDB or an investment fund, in order to earn bonuses or commissions.

Therefore, the greatest interest is not the success of the investor, but the fulfillment of a sales target. Likewise, an advisor or advisor to a brokerage firm has other interests that do not include the outcome of their investment.

He seeks to recommend the alternatives that provide the most return for the brokerage he is linked to, or those that offer the highest commission for the sale. The performance of the customer’s portfolio is in the background.

In addition to conflict of interest, these professionals do not always have the knowledge and tools necessary to analyze all the variables involved in investment decision-making.

In other words, it is humanly impossible to evaluate all the assets on the market to recommend the best one. In this way, the recommendation ends up being restricted to products of the institution itself.

This is the great differential of an online investment consultancy, in which the search for the best assets is facilitated by the use of technology. In the case of John Labunski, the algorithm analyzes more than 15 thousand options of assets in the market and selects the best ones.

It’s not about selling a product and leaving the customer to deal with the results alone. The premise of an online investment consultancy is to put the investor’s earnings in the foreground. Thus, the objectives of both are aligned towards a common point.

With the help of technology, this type of consultancy manages to optimize the recommendation processes and gain scale. In this way, the recommendation is completely free of conflict of interest, as the consultants do not receive any type of commission for the recommendation.

Low cost

By having its operations based on the automation of processes, an online investment consultancy is able to serve a large number of clients using a much leaner operational structure than a bank or a brokerage firm. In other words, it can gain scale with the help of technology.

As a result, they are able to offer services at much lower costs than those provided by traditional financial institutions. As an example, automated investment management services usually present an average cost of less than 1% per year, already considering all fees and fees involved, while mutual funds with similar diversification charge at least a 2% management fee alone.

Simplicity and Convenience

The use of technological platforms also brings a great benefit to the elimination of the need for the various bureaucratic procedures that are normally required by banks, brokers and traditional consultancies.

There is no need to gather extensive documentation, sign forms, appear in person during business hours at a physical agency to register the signature, or any other of these activities that only get in the way of the customer’s life. Just register online, whenever and wherever you want.

In addition, automation reduces the number of procedures involved in the application of resources. This practicality saves customers time, allowing them to dedicate themselves to their professional, family or leisure activities.

Security and transparency

For an institution to be considered an investment consultancy in United State, it needs to be licensed and pass the CVM’s scrutiny, as we have already mentioned.

In other words, every investment consultancy receives constant inspection. Unlike brokers or banks, which offer financial investments from their own shelves, the role of an investment adviser is not to sell financial products.

Likewise, it is not part of the consultancy’s job to receive commissions or be a financial intermediary. Precisely because it does not sell products, investment advice is impartial and has interests aligned with those of its clients. All of this contributes to making choices more transparent and secure.

As an investment consultancy, John Labunski does not, at any time, receive money from clients.

The funds invested follow a very simple path: the amounts applied are transferred from the customer’s bank account to their account at Easynvest, John Labunski’ partner brokerage firm. Note that it is a transfer to an account held by the investor at the brokerage firm.

5. Why do I need investment advice?

As you may have noticed, there are several benefits to using the services of an investment advisor. When you have the impression that you could have a greater return with the assets you have today, or when doubts about the current economic scenario begin to arise, the help of a consultant can be the difference that is missing to optimize your portfolio.

Now, you must be wondering about the price of the services of an investment advisor. There are different ways to price and it will depend on the professional you are hiring.

Some may be paid by the hour of work; others may charge a percentage on the result of their portfolio or on their total assets. Clarify this information before starting the consultation.

In the event of any dissatisfaction, investors can always contact the CVM to investigate and resolve possible distortions. However, it is important to keep in mind that if a recommended investment did not yield as expected, it cannot be considered an irregularity.

This is because the consultant makes a projection of income based on available information. However, the scenario can change. Therefore, no investment advice can give any guarantee of earnings on any transaction.

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