How to Pick the Right Share Market Advisors


A very important step on how to invest in stock market is to pick the right stock market advisor. Your advisor is in many ways like your wealth doctor and enables you to create wealth in the long run. An advisor has a unique role to play to play because they have to be dispassionate at the same time being a partner in help you grow your wealth. How do you pick the right share market advisor for yourself? While there are no hard and fast rules, here are some basic guidelines that you can follow:

When it comes to stock advisors, reputation is everything

What should be your starting point to get a good financial advisor? Start off with the right referrals. In fact, getting a strong referral from a friend or family member can be the first step in finding the right financial advisor. What else should you look for? Look at the background, qualifications and the reputation of the company the advisor works for. The track record also matters because the proof of the pudding lies in the eating. Do they have a strong track record of success? Be clear on two things at this stage; you do not need a guy who is just street smart and you do not need an advisor who shoots from the hip.

You need an advisor who is ahead of the curve

In other words, the stock market advisor has to be extremely proactive. You do not need an advisor who sits back and reacts to a situation. Your advisor should be able to advise you well ahead of the others. That is what the key differentiator is. Good advisors keep the lines of communication open, updating you on current financial issues and opportunities. They help make complex financial concepts easy to understand. As Lynch would say, they explain with a piece of chalk. Rely on a financial advisor who tells you the upside and the downside of every story.

The really good advisors never panic in a crisis

Get an advisor who is patient and doesn’t panic. This is critical to your investment success. The advisor should be constantly evaluating options and giving you ideas that fit you’re your profile. To be frank, the last think you need is a stock market advisor who constantly keeps pumping the latest hot stock pick with a sense of urgency. A genuine advisor who has your interests at heart will never do that.

Does the advisor really inspire confidence and trust in you?

You need a financial advisor you can trust to have confidence in their recommendations. If the very body language or the tone of your advisor is not inspiring confidence, just push back. He is not the person you want. If you feel nervous, fearful or stressed out after discussions with your advisor, end the relationship as soon as possible.

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Has the advisor passed all the professional exams?

Ensure that your stock market advisor has significant experience in the financial services industry or some sort of industry-recognized certification. Every stock advisor needs to go through a series of SEBI recognized examinations which will certify them and these certifications have to be updated regularly. If your stock market advisor has an additional qualification like a CFA or CA then that is an added advantage for the profession.

Good stock market advisors are typically risk minimizing agents

Sound financial advice is based on more than just your income level or the types of asset classes you invest in. A good financial advisor will take the time to learn about your full financial situation, investigating your banking, investment, insurance and credit needs. Your risk matrix is the key to designing an equity portfolio for you. Only by understanding your spending habits, debt obligations, life goals and more can a financial advisor begin to develop a meaningful and accurate strategy. Not otherwise!

Does the stock advisor really have a clear cut strategy in place?

You actually need an advisor who is not just a thinker, but also a strategist. Prefer a stock advisor who has a clear strategy for different market conditions. You don’t want an advisor to take a decision and then blame extraneous factors like interest rates, Gulf war etc for the under performance of your portfolio. Ensure that when your life circumstances change, as they often do, your advisor is able to revise your strategy appropriately.

Good share market advisors work with your not for you

A good financial advisor will always keep the lines of communication open with you. They are not only focused on you but also in your family members which enables them to give a more holistic solution. A good financial advisor will meet with you and your family regularly throughout the year. And that level of attention should continue every year of your relationship. Too many times, advisors show a lot of interest till the time you cut the cheque but after that their interest wanes substantially. You don’t need such fly by night stock market advisors.

Last, but not the least, they must your interests first

Professional advisors tailor your plan to meet your goals. They don’t push products on you simply to meet quota or to get the biggest commission. Be wary if your advisor is trying to push some unknown penny stock or a new IPO or a mutual fund NFO. These are sales pitches and good advisors will never try to make a very aggressive pitch. That is the job of a sales person. Check whether your advisor represents a wide range of products and service options or if they’re restricted to only proprietary solutions their company sells. Basically, you need an advisor who can give you time, attention and focus.


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