June 15, 2024

What is Investment Advice?

Any recommendation or guidance regarding investment products or series of investments is considered investment advice.

An investor can receive professional advice when the investor pays a fee for their guidance and expertise. Or, it can be amateurs, like specific blogs, chat rooms, or conversations. It is legal to provide stock advice and pass on investment information. However, insider information may be prohibited.


  • Investment advice is precisely what it sounds like. It is a recommendation that aims to educate, guide, or inform someone about a specific investment product or set of products.
  • Depending on the person giving the advice, investment advice can be either professional or amateur.
  • Brokers, bankers, financial planners, and brokers can often offer investment advice for short- and long-term financial goals.
  • Before making any investment suggestions, always verify a financial advisor’s qualifications.

How investment advice works

Investment advice represents any recommendations about an investor’s portfolio. Investors can get investment advice from many professionals, including bankers, financial planners, and brokers.

An investor should verify the qualifications of the person dispensing investment advice before making any investments. Information provided by entities for informational purposes about financial markets and specific assets may be clarified to indicate that they are not giving investment advice.

Limitations on Investment Advice

Professionals who may be able to offer investment advice are cautioned about their potential impact and the potential consequences. When offering investment advice, it doesn’t matter if the bank is independent; specific requirements must be met. This includes gathering enough information about the client’s financial situation and needs.

It is ultimately up to each investor to determine which investments are best for them, but it might be beneficial to consult a professional investment advisor if in doubt.

They understand the nature and relationship between the investment advice offered and the client’s expectations may be necessary. Investors who provide investment advice need to show no conflicts of interest. This is especially important if an advisor recommends investors invest in a particular industry, market, or trading asset. Investors may suffer damages if the source of their investment advice fails to fulfill these duties.

Take Note

Other professionals, such as estate-planning lawyers, could be held responsible under the Employee Retire Income Security Act (ERISA) fiduciary requirements. They could also be held liable if they provide investment advice or guidance.

An individual can be considered a fiduciary under ERISA if they provide investment advice for a fee or any other compensation. This could include direct or indirect payment. This includes advice regarding 401(k) and other employer-backed benefits programs.


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