Definition of 'Investment Advisor'
As defined by the Investment Advisors Act of 1940, any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications.
An investment advisor who has sufficient assets to be registered with the SEC is known as a Registered Investment Advisor, or RIA. Investment advisors are prohibited from disseminating advice known to be deceitful or fraudulent, and from acting as a principal on their own accounts by buying and selling securities between themselves and a client without prior written consent.
May also be referred to as a "financial advisor".
Investopedia explains 'Investment Advisor'
Mutual fund companies are generally included in the definition of investment advisors, but stockbrokers are not (they receive fees from commissions and not asset-based compensation).
Most investment advisors charge either a flat fee for their services or a percentage of the assets being managed. In most cases, there are very limited conflicts of interest between investment advisors and their clients, because the advisor will only earn more if the clients' asset base grows as a result of the advisor's recommendations and securities selection.