What is the role of an investment advisor in mutual fund transactions?

The role of an investment advisor in mutual fund transactions is primarily to assist clients in selecting appropriate mutual funds that align with their investment goals, risk tolerance, and financial situation. Investment advisors possess the knowledge and expertise to analyze various mutual fund options, helping clients navigate through different funds' characteristics, performance histories, and fees. By doing this, they ensure that clients make informed decisions that suit their individual needs.

While managing funds directly might be a part of some investment advisors' roles, it is not the primary function in the context of mutual fund transactions, which often focus on recommendations rather than direct management. Auditing the performance of mutual fund companies is generally a separate regulatory function and does not fall within an advisor’s typical duties. Additionally, while investment advisors work to mitigate risks through diversification and proper fund selection, it is not possible to eliminate all investment risks, as risks are inherent in all types of investing. Thus, the correct answer accurately reflects the primary role of investment advisors in guiding clients through the mutual fund selection process.