What is one key role of an investment advisor?

An investment advisor plays a crucial role in providing guidance that aligns with their clients' financial goals. This involves assessing the client's current financial situation, understanding their risk tolerance, investment horizon, and future objectives, whether it be saving for retirement, education, or wealth accumulation. By doing so, the advisor can craft a tailored investment strategy that best fits the client's needs and helps them achieve their financial aspirations.

Investment advisors are not able to eliminate all risks from a portfolio; instead, they focus on managing risks through diversification and asset allocation strategies. While some may manage mutual funds, the role encompasses much more than that, as advisors can work with individual stocks, bonds, and other investment vehicles. Additionally, a key responsibility of an investment advisor is to establish and stick to a consistent investment strategy over time rather than frequently changing it, which can lead to increased transaction costs and potential market timing risk.