Is it Really Your Financial Adviser?
If you have a financial adviser, then you probably have a way of determining if your adviser is a good fit or not. Usually, investment track-record and trust are two of the biggest factors when it comes to determining whether or not you are happy with your adviser. Being a financial adviser is essentially a sales job and requires an adviser to be knowledgeable in a variety of areas which include, for example, investments, debt management, and creating financial plans. Unfortunately, many clients are under the impression that financial advisers have the magic touch when it comes to recommending investments that outperform the market. Well, that is simply not the case as most financial advisers are hired to help you achieve a financial goal. Financial advisers simply recommend the best financial vehicles which will allow you to accomplish your goals while minimizing risks based on your risk tolerance. Most advisers are not attempting to outperform the markets in which they invest money for their clients but frequently get the blame for underperforming the market.
Clients of financial advisers should be clear that there is no magic formula when it comes to investing your assets as the best financial advisers are good at relationship building and frequently rely on investment recommendations from third parties or an in-house investment committee. The bulk of client returns are going to be largely dependent on how their assets are allocated between stocks and other investment vehicles. Clients should recognize that the more you allocate your assets to stocks then the higher your long-term investment performance is likely to be. It is that simple. If you want the best long-term performance then you and your adviser will have to decide on a plan that takes advantage of the fact that the stock market is biased toward the long-term investor. Unfortunately, as a client, you cannot have it both ways and expect great long-term performance with no short-term volatility. Again, remember, the overwhelming majority of financial advisers recommend the appropriate asset allocation between several stock, bond, and other indices but will likely not be picking individual stocks for clients.
No matter how big the company or how recognizable the name of the company your financial adviser represents, most solutions recommended by your adviser will be basic asset allocation strategies that will likely underperform the market after fees. As a client of a financial adviser, when your portfolio underperforms the market or simply tanks in value, it will likely be because you were too heavily invested in stocks for your risk preference and not because your financial adviser is bad. However, there are times when your adviser might be horrible, but those situations are rare. Since stocks are still by far the best asset class to invest in over the long-term, an investors’ focus should be on finding the best equity-based solutions available. The S&P 500 has returned about 10% a year on average since 1926 and expecting your adviser to do better than that is probably unrealistic, especially after fees.
If you are truly in search of higher investment returns then you have to be willing to pick individual stocks to build a portfolio that provides higher returns than the market, preferably with lower risks. Here at Investoristics, we have developed a highly focused stock picking approach based on quality, value, and financial strength that has a history of providing market-beating returns vs. any index with significantly higher returns and lower risks than any major index. Fortunately, we have also developed a way to significantly dampen volatility even in the worst markets. If you are unsatisfied with your investment returns, then we have the answer. We are available to answer any questions and when you are ready, join “The Collective.”
