What Is an Advisor Account?

An advisor account is an investment account that comes with the services of an investment advisor who can provide guidance and assistance for a hands-on investor who wants to make active investment decisions. Many investment firms offer this type of account among their services and may include other benefits along with the financial advisor. Investors considering this option may want to get quotes on products and services available from several reputable firms to learn more about the different options and their prices.

In a typical arrangement, the fees for an advisor account are based on the assets under management. Investors may need to maintain a minimum deposit in order to remain in good standing. Fees may be taken out of the account directly or periodically billed. The investment company holds the account and takes care of many aspects of management, but the investor decides how, when, and where to invest. This party also has the final say in any investment decisions.

The level of guidance available with an advisor account can vary. Advisors typically tailor their services to the needs and experience levels of their clients. Some clients need relatively minimal guidance but may want periodic advice or confirmation that a proposed investment would be a sound one. Others rely more heavily on investment advice and may also seek out investor education and other support services offered by the investment company. Many companies offer a variety of educational materials to help their clients become more informed about their choices.

With an advisor account, a financial advisor can only provide guidance, not mandates. Investment advisors have a fiduciary duty to advise their clients wisely and may point out that an investment would be unsound or could carry risks, but they cannot force their clients not to engage in bad investments. Conversely, they also cannot compel clients to purchase sound investments, and must be careful about the language they use when discussing investment options. An advisor could be legally liable for claims guaranteeing a set return, for instance.

It is possible to blend an advisor account with other kinds of accounts, or to hold multiple accounts that may offer different levels of service. Investors might prefer to leave the bulk of their money in the hands of a trusted investment manager who will handle investment decisions. They could use a small amount of funds on their own investments through an advisor account to learn more about the process and develop skills without risking the bulk of their assets.