Many of the immature investors seek advice from the investment advisers to improves their returns on investment.
Immature investors have to be knowledgeable and experienced to pass an independent judgment for any of the investment opportunities communicated by others. Investors need to analyze the services provided to him by the consultant or advisers are of benefits to them or him, whether they are involved to generate commission/brokerage or true advice, etc. Intelligent investors look at the recommendation provided by reputed firms but they decide by themselves. So that we can have safety rather be sorry for the decision. It is always a question that should we manage our portfolio independently or should we seek for the help of others? It depends on to them how we have performed during the market cycle, better than the market or not, whether we can easily meet our financial goal or does we require to take help.
Before trusting any of the advisers, we need to make our due diligence and check whether any complaints, fine, a penalty against him or not. Before selecting an adviser, we need to ask a few questions –
Answers of the above questions provide us clarity of selecting or rejecting an adviser. It is difficult to find a genuine adviser so that we also need to do due diligence from our side. I have experienced that no investment strategy outperforms in every period so that we should analyze the performance of the adviser over a market cycle, does adviser changing his process frequently? does he behave rationally with his investment or get emotionally trapped by market moods? We need to analyze all such aspects. And the most important aspect is to have an investment process and investment philosophy. If the adviser does not have it then we do not have to be in help of him.
Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation.
Read for more detail: The Intelligent Investor by Benjamin Graham, Jason Zweig