Many investors wonder whether they should rely upon a financial adviser to manage their investment portfolio. Although this approach will save them hours of investment research, and prevent many sleepless nights, commissions and fees will reduce profits and lower returns. In the eyes of some investment-seekers, this expense is seen as an avoidable and unwanted loss. Thus, many choose to advise themselves and manage their own money.
In order to be of any value to an investor, a money manager or adviser is expected to closely monitor international developments and stay constantly aware of changes in the world’s financial markets. This means watching gold, bonds, ETFs, stocks, and more. Moreover, managers/advisers are relied upon to swiftly apply their insight to the funds they manage; often for an almost unmanageable number of clients.
The trouble with relying upon a financial adviser or money manager is that the content they consume is subject to their own interpretation. This means that investors are relying heavily upon their adviser or manager to have a proper, unbiased, factual understanding of the information presented. It is no place for personal, unsubstantiated opinion, like this example with Davenport Laroche discovered on an adviser’s website.
A growing number of investors are choosing to do independent investment research to gain their own understanding of the investments in their portfolio. This allows them to better assess tolerance for risk and understand how each investment is performing. The result is a more confident investor that can build and maintain a strong investment portfolio, without the help of a costly fund manager.
The downside to being your own investment adviser is that the responsibility to stay informed falls squarely on your own shoulders. Likewise, in the event of a worst-case scenario, the blame is also entirely yours. In some instances, the adviser’s fees will be less than the losses that an inexperienced investor could potentially incur.