Understanding the Role of an Investment Management Company

Although some individuals relish controlling their own destiny as a “do-it-yourself” investor, others often prefer having access to guidance and savvy advice when it comes to making critical investment decisions and building wealth through investment portfolios.

These days, individuals will find a crowded field of players offering financial advice and services. The question for many is where to turn? Following the famous stock market crash of 1929, the government put new rules in places to protect investors and create more stability to financial markets. Specifically, the Investment Company Act of 1940 created different classifications for investment companies with oversight and regulations handled by the Securities and Exchange Commission (SEC).

The most common type of investment company is an investment management company. Management companies assist individual or institutional investors in making investment decisions that help them to achieve specific investment objectives, such as building wealth over time and/or generating income. These investment advisors may assist with investment in a variety of vehicles, such as stocks, fixed income securities, real estate and funds among other products.

Pros & Cons of Management Investment Companies

One of the top reasons investors choose to work with a management investment company is that it can be very challenging to navigate in an increasingly complex investment market. Management firms often have the tools and resources to assist clients in maneuvering market challenges that include:

  • Thousands of investment vehicles to choose from.
  • A marketplace that is increasingly crowded with information.
  • Dynamic and rapidly changing market and economic conditions.

A potential negative of management investment companies is that there is a cost. When choosing a trusted investment advisor, it is always important to understand the fees and/or commissions that the advisor will charge.

Different Types of Investment Companies

Individuals can choose from different types of financial advisors, asset managers, and investment firms. Some of the main options include broker-dealers, Registered Investment Advisors (RIAs) and “robo” advisors.

Robo-advisors: These tech-based investing solutions feature a fully automated, online platform with little to no human interaction. Investors fill out an online survey to establish investment goals and objectives, and the robo-advisor uses computer-generated algorithms to create a portfolio strategy.

Broker-dealers: A broker-dealer firm or individual is in the business of buying and selling securities and is very transaction-oriented.

Registered Investment Advisors: Much like its name suggests, an RIA provides investment advice and makes recommendations to clients. RIAs are registered and governed by the SEC.

In addition to advice and assistance with management investments and portfolios, some RIAs also will provide additional services and resources to investor clients. For example, CanAm Capital Management (CACM) provides access to strategic partners with expertise in areas such as:

  • Tax planning
  • Trust & estate planning
  • Risk management

One of the key differences between a broker-dealer and RIAs is that an RIA has a fiduciary responsibility to act in the best interest of their clients. For example, RIAs are required to disclose any potential conflicts of interest to their clients. As with any investment decision, it is important for investors to do thorough research when choosing a Management Investment Company or RIA.

CACM strives to help our investors by utilizing the investment and legal tools available in the United States to preserve and grow their family’s wealth.

Scroll to Top