8 Things You Should Look In An Investment Advisor

Whether you are new to making investments, or have been around for some time, it is essential to know that your financial advisor is your Guru. Any kind of investment - stocks, mutual funds, real estate, business - are very significant and to take care of them is another issue that needs proper handling and need you personal attention.

While you would be clear that you need to identify an experienced professional for this, but on what criteria would you decide if that person is right for you. The below pointers will come in handy.

Personal experience
Do not get lured by someone with fancy certificates in finance, as long as a person hasn’t been into the game himself, he can’t guide you well. The decision of how much to invest and where to invest comes after considering several things like inflation, insurance, loans, estate planning, retirement and many more factors. All these factors will be considered when your advisor has personal experience in investing. Moreover, even beyond this, it is also essential to see how many years of experience has he had as an advisor to others.

Knowledge beyond education
There are professionals who write books on finance and investments, and are known for giving advice in their content. Here the situation is theoretical, but real life financial situations are drastically different. Find an experienced investor and not a writer you can consult. Nothing that worked 10 years ago will work today. Financial situations change every few months and every advisor should be aware of the changes that are going around and what is now a good investment field may not be good the next year.

Ability to customise the portfolio
Every person has a different financial situation, so if the advisor makes plans according to your lifestyle, then you will get a good start. Especially, while investing in the market, choosing a stock portfolio wisely will take you long way. The investment should meet different goals and invest in resources that will be beneficial in the future. A right advisor can guide you to the stocks and industries to invest in based on his experience and your own knowledge of the market.

Highlighting Risk Management
Every investment area comes with certain risks: real estate value fluctuates, banks interest rates can also have its ups and downs, stocks and shares have their own characteristics. The advisor should first put forward the risks that are related to the field that they choose for investing. It becomes easy to calculate the risk when you are aware about it and have a plan to back it up if things go ‘South’. You should be able to get the right facts from the advisor and also learn how to minimise those risks.

Other client reviews
Once you have narrowed down your options for deciding which advisor to go with, you might want to consider getting in touch with other clients to get a feedback. Honest reviews will give you a clear picture if the person you have chosen is the right one to guide you with your crucial investments.

Engage an advisor, not a sales person
Don’t get your investment advice from someone whose primary function is to sell investment products (stocks, bonds, mutual funds, etc.), because it is an inherent conflict of interest that biases the advice you receive (true for most stock brokers and financial planners). Instead, separate the investment planning function from the investment product sales function and pay for each separately.

Relevant sector expertise
A person with a great experience in real estate investments might not be your best friend in case of stock market. Look for an expert with knowledge about the sector you are looking to invest, and if you are completely depending on the same person with multiple field investments, then ensure that he has experience in those areas.

Ability to answer relevant questions
If the investment advisor is talking a lot, ask him to pause and start asking questions that are bothering you. Remember, it is you who is investing your hard money and any profit or loss affects you only. So, it is better, you clear your doubts and ensure that you are satisfied with his answers. Most of the time people do not ask questions as they think that the plan chalked out by professionals is the best one for them. But, if you have any doubts it is important to get them cleared beforehand.

This article is written by Amit sharda, Co-Founder and Head of Products at Traderscockpit

Image: economic times