EVOLVE FINANCIALLY WITH AN ADVISOR
According to the third CFA institute investor trust study survey covering 3,127 retail investors and 829 institutional investors worldwide, 70% of Indian investors work with professional advisers compared to 54% globally; 81% of these began work with advisers in the past six years. Of these Indian investors, 31% investors listen to primary advisers, 30% depend on online research and 19% take advice from friends and family. The investor looks for someone who will act in their best interest and can achieve high returns. In another survey, sixth-annual Legg Mason Global Investment Survey (LMGIS ), 44% investors with financial advisors in Jaipur feel that volatility is “positive – if managed properly” as against 27% without advisors. This indicates that investors with advisors are more likely perceive volatility as an opportunity. The chart below is reproduced from a survey report of IIMS Data works Survey and shows with whom would Indians trust their money.
Benefits of Financial Advisers
So, what do the financial advisors bring to the table for you? According to Accenture Consulting survey report. “a human advisor (even if advice is provided virtually) is still seen by a slight majority (51 percent) as the most reliable option for new investment ideas. 57 percent of investors felt human advisors (virtual included) provided the best customized advice.”
Decision Making – Financial advisors assist you in objective decision making. Generally, an investor tends to get emotionally attached with his portfolio. When the markets undergo upheaval, he is liable to get swayed by the volatility and take biased decisions. A good professional advice from his financial advisor will assist him to arrive at objective and well thought through decisions. Moreover, financial advisors come to you with experience, intimate knowledge of financial products and market research. By virtue of their work, the financial advisors are in touch with numerous wealth managers, investment bankers, mutual fund managers and most importantly the common man to know the market sentiment and its buzz. This makes decision making more holistic by avoiding myopic and blinkered market view.
Diversification – They help you to diversify your investments. The financial advisor in Jaipur understands the importance of diversification as a means to beat the market volatility and thus helps you to stay on course to meet the financial goals. Statistically, as per the LMGIS survey, advised investors are better informed and more confident to diversify their portfolio into asset classes other than equities.
| ASSET CLASS | % OF ADVISED INVESTOR | % OF DO IT YOURSELF (DIY) INVESTOR |
| Equities | 44% | 60% |
| Real Estate | 31% | 18% |
| Domestic Bonds | 24% | 13% |
| Alternatives | 21% | 12% |
| Golds/Metals | 19% | 11% |
| International Bonds | 14% | 1% |
Taxation – A common DIY investor may not understand the taxation intricacies of various financial instruments. Furthermore, taxation is a dynamic process and staying updated regarding various facets is also critical. To make maximum gains, the investor must know how to work around the taxation labyrinth correctly to avoid paying taxes unwisely and coming under the taxman’s scanner.
Risk Profiling and Goal Planning – A financial advisor will put you through the paces of risk profiling and financial goal planning before suggesting investment options. This is the correct and methodical way of going about investment. A DIY investor at times overlooks these important aspects and gets carried away to invest in a financial instrument that is marketed better than others even though it may not suit his risk profile or meet his financial goals in the given time frame. Financial advisors tailor your portfolio from a plethora of financial instruments to suit your risk profile and help you meet your financial objectives within stipulate timeframe.
Professionalism – Financial advisors bring professionalism to your investment management. In accordance with your risk profile and financial goals, they carry out annual or half-yearly portfolio reviews and rebalancing to minimize losses and maximize gains. Next, they track the markets continuously and advice you at opportune times to book profits or cut out losses appropriately through redemptions, switches or purchases.
Better Returns – The use of a Financial advisor provides you the opportunity to generate better returns. The chart below is made from a sample survey carried out in the USA where it was deduced that advised individuals had a minimum of 25% and a maximum of up to 113% more assets than unadvised individuals. This was possible since advised individuals stayed invested for longer-term and had properly diversified their portfolios.
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