The way things are now, there seem to be a lot of compelling reasons to work with an investment advisor. Increasing complexity, market volatility, and geopolitical uncertainty. All the issues might encourage you to seek professional advice. But before you jump into paying a whole bunch of fees and outsourcing control of your money, consider what my experience was.
My experience in talking with investment advisors has been a challenging one. Notwithstanding some of them having many years of “experience”, I have found their knowledge to be, at best, superficial. Many investment advisors are simply pushing internal products for their institution to increase assets under management and the profitability of the firm. In my opinion, they are first and foremost salesmen and secondarily investment advisors. They use “canned” presentations to sell products and have very shallow knowledge of tax, accounting and the fundamental concepts of finance.
I’m not sure where the real work gets done, but it’s not at the investment advisor level. In many instances, if you do your own “due diligence,” you will likely know more than they do. It’s a great disservice to investors and clients that this is how the industry has developed, but it generates billions for the firms that are involved in investment and advisory fees. And as a result, a lot of “fat cats” are harvesting billions for their firms.
So, What Should You Do?
Investment advisors have a role to play, but you need to take a lot of time and effort to find the right one for you. That means that you will likely need to interview a lot of IAs to get a feel of their level of knowledge and professional expertise. Remember that you are interviewing them for a job. You are hiring them; they are not hiring you. Don’t be bullied by them when they try to convince you that they are experts who can best help you. You are paying them, and you are the boss. Don’t forget it! Having said that, the good ones are out there. And it’s like most things, you’ll get out what you put in when looking for an advisor.
This is the one area where I have been totally underwhelmed by many of the people I have talked with, except in two cases. They have been a delight to meet with, but I don’t need two advisors!
Most of them have not asked me what I need, what I want, what my goals are and how to achieve them. I have to fit into their “mould”. I am paying them, and they tell me when I discuss my needs that “that’s not what we do here.” What does that mean? I am paying you, you do as you’re told!
Stay away from these “fake” professionals who are only concerned with how much income they generate, not about how much money you make. But with time and effort, I do not doubt that you will find someone to work with. Don’t give up and stick to getting what you want.