Can a Financial Advisor Add Value to Informed Investors?

The Advocate - June 4, 1997

This is a comment from a person on a financial discussion forum I regularly contribute to that I thought may help readers of my column. Many investors in this forum say they don't need an advisor and they can do it all on their own. I believe a good advisor can add value to most do-it-yourself investors and I will attempt to convince you. Wish me luck.

I have been investing on my own for about ten years and have made a hobby of it. I originally believed that I could do it my myself but oddly enough, the more I knew about investing, the more I believed that I needed the help of an advisor. Before I go into details, let's look at the resources available to the do it yourself investor:

Books help you understand the general concepts of financial planning and investing. They will guide you on determining the proper elements of financial planning such as setting your retirement goals and determining how to achieve it. Newspapers and newsletters will give you a sense of current economic conditions and hopefully a sense of which direction the economy is going (and maybe add a few Bre-X articles for entertainment). Despite all the information available to us, there is some additional information which require research that most of us do not have the time or the inclination to do (unless you are retired, have a seasonal job, or are in a desperate need of a social life).

An important one is knowing as much information as possible about the fund managers. Studying the fund manager is the best information we have to peer into the future performance of the fund. A good advisor will know the background and the past performance of a fund manager beyond his/her current job. The advisor may have met the manager in person and has a sense of his/her personality. I think this forum is great to exchange certain types of information but when someone asks if his/her portfolio is any good or asks if fund XYZ is any good, my knee-jerk reaction is: What are you trying to achieve? What is your time horizon? What is your risk tolerance? No one can properly give advice without fully understanding the investor's profile, so much of the advice of this type has little value.

Having an advisor will help you in ways that no other means can. The advisor will know what you are trying to achieve and how you plan to achieve it, and he/she will know your risk tolerance. What kind of advisor do you look for? He or she must have lots of experience, you must make sure you work well together (you don't want to spend most of your time arguing), and make sure the advisor will add value to your level of knowledge.

If you have any questions, please call Reg Borrow at (519) 855-6639. He is an Independent Financial Consultant for Regal Capital Planners Ltd.

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