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Investment Advisers: What You Need to Know

The Trinidad and Tobago Securities and Exchange Commission (TTSEC) often receives questions about investment advisers—who they are and how to go about choosing one. This document answers some of the typical questions we receive from investors.

Q:  What is an investment adviser?

A:  An investment adviser is an individual that is in the business of and receives compensation for, giving advice to clients on investing in securities such as stocks, bonds or mutual funds.

According to the Securities Act, 2012 – “Investment adviser means a person engaging in, or holding himself out as engaging in, the business of providing investment advice, and includes a person that provides investment advice to a manager of a collective investment scheme”

Q:  What is the difference between an investment adviser and a financial planner?

A:  Most financial planners are investment advisers, but not all investment advisers are financial planners. Some financial planners assess every aspect of your financial life—including saving, investments, insurance, taxes, retirement, and even real estate planning. They even help you develop a detailed financial plan for meeting your financial goals.

Before you hire any financial professional, you should know:

  • whether the individual or institution is registered with the TTSEC or other financial institution,
  • exactly what services you need,
  • what services the professional can deliver,
  • any limitations on what they can recommend,
  • what services you are paying for,
  • how much those services cost, and
  • how the adviser or planner gets paid.

Q:  What questions should you ask when choosing an investment adviser or financial planner?

A:  Here are some of the questions you should always ask when hiring any financial professional:

  • What experience do you have?
  • Where did you get your accreditation? What is your recent employment history?
  • What licenses do you hold? Are you registered with the TTSEC, or a Financial Institution?
  • Can you only recommend a limited number of products or services to me? If so, why?
  • How are you paid for your services? What is your usual hourly rate, flat fee, or commission?
  • For registered investment advisers, will you send me a copy of your registration documents?

Be sure to meet potential advisers “face to face”.  

Q:  How do investment advisers get paid?

A:  Before you hire any financial professional—whether it’s a stockbroker, a financial planner, or an investment adviser—you should always make sure you understand how that person gets paid. Investment advisers are generally paid in any of the following ways:

  • An hourly fee for the time they spend working for you;
  • A fixed fee; or
  • Some combination of the above.

Get several opinions before making your decision. Also ask if the fee is negotiable. Remember it is your money and you need to know where it is going.

Q:  Do investment advisers have to register with the TTSEC?

A:  According to the Securities (General) By-Laws, 2015 Section 19 (2), not all investment advisers are registered with the TTSEC. Exceptions include:

  • Registered insurance companies under the Insurance Act and their employees
  • Registered financial institutions and their employees
  • An Attorney-at-law or an accountant
  • A publisher or writer of a newspaper or news/business magazine who discloses that he/she is not registered with the TTSEC; receives no commission; discloses ownership/interest in securities that /he/she advises on and discloses that he/she is providing advice solely as a writer or as an Attorney-at-law, or accountant.

Q: What should you do if the financial professional claims that he or she is “certified”?

A: If the professional you’re considering claims to be certified, you should ask to see their certifications and also refer to the TTSEC’s website at www.ttsec.org.tt to see if they are listed as an investment adviser, or have other relevant credentials, such as a certified accountant, or an Attorney-at-law.

Registered investment advisers with the TTSEC must meet the ‘fit and proper’ requirements outlined in the Securities (General) By-Laws, 2015. According to the By-Laws ‘fit and proper’ requirements refer, but are not limited, to:

  • The financial status/solvency of the person;
  • The educational or other qualifications or experience of the person;
  • The ability of the person to carry on the regulated activity or execute its fiduciary duty competently and fairly;
  • The reputation, character, reliability and financial integrity of the person/individual, entity, or senior officer or significant holder of the entity.

Do your own research as investment advisers and financial planners may have different educational and professional backgrounds.

This Q&A is for the benefit of investors. There are many types of individuals who can help you develop a personal financial plan and manage your hard–earned money. The most important thing is that you know your financial goals, have a plan in place, and verify that the professional is a registered financial or investment adviser

The Trinidad and Tobago Securities and Exchange Commission is not an investment adviser nor is it a brokerage house. This article is intended solely to provide you with the information you need to help you make sound investment decisions and to ensure that you are familiar with and understand your rights and responsibilities as a consumer of financial services. To lodge a complaint, ensure that you complete the prescribed complaint form located on the TTSEC website www.ttsec.org.tt.

 Before investing, educate and empower yourself!

To learn more, visit investucatett.com, follow us on Facebook or call 624-2991. If you have any questions or comments feel free to email us at ccei@ttsec.org.tt.