Should You Engage an Investment Advisor?

These days there is massive repugnance at the financial shrewdies who caused our current global calamity. While there are many factors that combined to create the situation, the financial community gets the personal blame.

Not only that, surveys reveal most people with financial advisors are actively considering dumping their current advisor in favor of some other one, or self management of their money.

Further, recent statistical research intensifies this choice. In many of the blog posts on this site, we explain the research into money manager performance. It all shows that it’s exceptionally difficult to pick a manager based on his historical return on investment (ROI) performance, because just as the famous disclaimer says, past performance does not predict future performance!

In this context, the most important questions for individuals are:

  1. Shall I manage my own money or outsource?
  2. If I outsource, how can I choose an advisor wisely?

Here are some key ideas to help you answer these questions:

No registered investment advisor can reliably promise an ROI because ROI is neither predictable nor controllable. No advisor can reliably promise to perform better than some benchmark index. Similarly, no advisor can reliably claim to produce an ROI better than what you could do for yourself. No one can know those things.

Registered Investment Advisors can promise through their discretionary management to:

  • pay attention to your money and investments
  • use good judgment in entering or closing positions.
  • engage you in wise conversation about your goals and how your investments can support them

The deep value of an investment advisor is to support your strategic planning to achieve your financial goals-it’s not mere stock picking.

In other parts of this site, you can read the posts on details about how to choose an advisor. Click on “How to Invest” under categories, or go to:

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