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What Investors ‘Really’ Want

I have a lot to say from my recent interaction with a financial advisor whose company had advised a friend’s father into making a lot of bad mutual fund investment decisions.

The last two posts (here and here) covered this topic and the next two will also do this.

One of the points of discussion I had with the financial advisor was that the bad investment decisions that my friend’s father made was of his own doing. This is what the advisor accused him of.

“Who knows who advised him such funds? Probably he himself might have chosen them,” he told me.

“Why, weren’t you his financial advisor?” I asked.

“We were, but you can’t say with guarantee that we advised those under-performing funds to him,” he said without owning any guilt of what he and his peers were doing with investors’ money and trust.

“Boss, when dealing with financial advisors or financial experts, an investor is rarely wrong.”

“How can you say so?”

“Because the fault lies in you, the smart guys who pose as experts and lead the investor to trust you.”

“You can’t blame us for all the investor’s faults.”

“Why can’t I? The investor just wants one thing from you, and that is to know where he can invest his hard-earned money so that it grows and makes him and his dependents richer.

“So he has a problem, and he approaches you for help. It’s your responsibility to guide him carefully and honestly.”

“That’s what we do, sir.”

“I don’t think so, looking at the way you treated this particular investor I’ve been talking about. You’ve handled his savings recklessly and dishonestly.”

What investors want?
Every investor (I am not talking about a speculator here, but just an investor) comes to the stock markets with the hope that he will be able to identify the right kind of investments that will help him grow his wealth and maintain his purchasing power over the long term.

He has dreams of meeting all his financial goals – children’s education and marriage, an expensive gift (like a world tour) for spouse during the middle years, financing a home purchase, and of course his retirement.

He needs money for that…a lot of it.

But then, when he comes to the markets and sees the behaviour of other participants and stock market experts (including financial advisors), he is lost.

Either he thinks the stock market is a casino, or he gets along with what others around him are doing.

If he chooses the latter path i.e., to stay in the stock markets and invest in money either through stocks or mutual funds, he either goes by his own hard work in selecting the safest and best investments, or he leaves it all the decision-making to his financial advisor.

As in case of my friend’s father, he trusted to leave the decision-making to his financial advisor. His dependents are now paying the price of that trust, which lies broken.

So are all financial advisors bad and unethical and don’t know what investors want?

I am not saying that! In fact, I know a few advisors who are ethical, intelligent and supportive, and who are ready to go to extreme lengths to make sure that their client’s interest is never sacrificed. They know what investors want and they advice accordingly.

But then you have to be really lucky to find such people.

Now you may ask, “How do I find such a financial advisor who is ethical, intelligent, and supports me well in my financial decisions?”

Well, my next post will cover this very aspect – the art of choosing the right financial advisor.

Till that time, see if you can take some time out of your busy schedule and ask yourself these 5 simple questions:

  1. What is the purpose of my investing in stock markets (stocks and mutual funds)?
  2. What do I want my investments to achieve for me? (Your financial goals)
  3. How much time have I given my investments to achieve what I want them to achieve for me? (Your investment time horizon)
  4. Is my financial advisor really helping me in achieving my financial goals?
  5. If not, what am I doing about it?

PS: Don’t forget – If you have a friend or colleague who you think would like to hear from me, please sign them up for The Safal Niveshak Post. They’ll get a polite invitation – which they can decline – and I never share my email lists.

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

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