Remember: Never ask a barber if you need a hair cut.
3 views on Investment Advice
View # 1 – It’s worth nothing.
I can invest my own time and effort to make my own investment choices. I understand what I am after. I have the plan in my mind. I have the discipline to follow it through. I might make a few mistakes now and then but better to fall and learn by oneself than burn fingers based on someone else’s advice. I don’t need investment advice.
View # 2 – It’s worth something.
I believe an advisor by the virtue of his specialisation, possesses more understanding and knowledge of the subject than I do. It is good to access and benefit from the same to compliment my own effort to build a solid investment portfolio. Plus the advisor helps me keep a control on my urges to act strange or invest in “fancy” products. I want this investment advice.
View # 3 – It’s worth everything.
To me, my investment advisor is the coach, mentor and guide for my financial life and beyond. I have no inclination or time to put in the effort to get my financial life in order. The advisor is my goto person. He not only understands where do I need to go with my money but also helps plan out the specific details. He also ensures that the required actions are taken in a timely manner.
Left to myself, I can end up blowing my money, make no investments or buy bad ones. Worse, I will have no clue about what’s happening with my money. I need my investment advisor, badly.
You have to know which one of the above is you.
The third investor is clear in terms of need and expectation. He is the one who pays for advice too.
The second one too is clear. However, sometimes, he lets the cost (fee) interfere with the value.
The first one is clear too. He doesn’t need any advice.
You will likely move between the 3 views at different stages of your life.
Having said that, here is a quick list of what comprehensive investment advice gets you:
Understanding what you want your money to achieve – tangibly and intangibly
Find out your current investment knowledge
Know what risk means to you
Understand your income prospects
Assessing where you stand today in terms of finances – a full view
Assess your current protection through insurance or otherwise
Chart a path to move towards your goals
Helping you select the right financial instruments
Keep nudging you and ensuring that you walk down the path
Help you get unstuck
Prevent you from being ‘lured’ and making big mistakes
Celebrate your achievements – financial & otherwise
There is actually one more view, the fourth one – I will take investment advice as long as it is free.
This investor moves from blog to blog, forum to forum, keeps posing questions with some information hoping to receive comprehensive advice. He has made wrong investment choices and now wants to come out of them. He made a mistake before, he makes one again now. That doesn’t work.
The only free advice he gets is where he doesn’t have to pay a fee, out of pocket. Of course, the products he buys ensure that the necessary compensation is passed on from ‘his’ money to the ‘advisor’.
I wonder what such investors do in a medical situation? Unless the ‘question of life’ has a bigger meaning than the ‘question of money‘.
Many fingers have been burnt and in some cases hands have been chopped off working on FREE advice.
But again, I am the barber here.
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