Investment advisors or financial advisors hold a very important part of one’s investment journey. Every person who believes in stability and preparing for the future needs help to generate wealth and preserve it to cushion him from any financial uncertainty. A successful investment advisor combines the best of analytical and technical tools and his deep research of various aspects involved in investments and money management abilities to help clients define and reach their financial goals.
So, when it comes to choosing an ideal financial advisor, there are various other responsibilities that they hold, and probably that is the reason that SEBI has been very strict in certifying an entity is a financial advisor. A financial advisor needs to maintain strict standards when it comes to their responsibilities towards a client.
But are the SEBI registered investment advisors worth the investment?There are some of the benefits of getting a SEBI registered investment advisor. Lets discuss about each one of them in detail:
1. Lets You Know Your Risk Appetite
The first and foremost step that every certified investment advisor takes is to know about the risk appetite of the client. A risk appetite analysis helps you know the amount of risk that you are capable of taking in the market. Investing comes with its own set of risks. No investment can be considered as cent per cent risk free. It is better to be prepared for the worse and a risk profile helps you know the same.
To calculate your risk appetite, your investment advisor takes into account a number of parameters including your income, assets, liabilities, dependent in family, your age etc. All these parameters helps in knowing your risk appetite, based on which the investment advisor helps you embark on your investment journey.
2. Investment Planning
The very obvious role of an investment advisor is to plan the perfect investment for you. The investment world is a plethora of offerings of different instruments for investing your capital. An investment advisor takes into consideration your investment capital, investment goal, investment horizon and most importantly your risk appetite to choose the most apt investment instrument for you.
Without the help of an investment advisor it becomes confusing to pick the appropriate investment instrument for your needs. For example you need to plan for your retirement, which involves investing your capital for a long term. Now there are thousands of investment plans and schemes and finalizing one is not an easy task. Any wrong step in the selection can severely hamper your portfolio.
3. Diversification
Diversification is one of the most important factors for being a successful investor. Diversifying your investment portfolio i.e. investing in different segments and different instruments helps you hedge out the market risks up to some extent. As we discussed, the financial markets have plenty of investment opportunities and as an investor it is next to impossible for you to know about each one of them.
The investment advisors deal with numerous clients on daily basis which helps them in updating themselves with the latest market offerings. For example you may have an edge in investing in base metal commodities. An investment advisor will diversify your portfolio by dividing your capital across different segments such as energy, precious metals etc. As a result, if there is a fall in any one of these, the loss will be recovered by the other two. Diversification plays a key role in investment and no one else apart from your investment advisor can help you diversify your investments better.
4. Convenience
You must have come across individuals, who are always worried about their investments in the financial markets and as a result, they keep themselves glued to financial news channels and other sources to keep themselves updated about the latest events which can have an impact on the market. Opportunities are created in the market every now and then, but you need to be prompt and updated to make the most out of them.
With the help of an investment advisor, you simply need to follow the advice and place your trades accordingly. Advisors have a large network of researchers who keep a track about the latest happenings around the world and can predict market movements based on technical and fundamental analysis. It requires lot of experience and qualifications to be a certified researcher, after all predicting market movements and providing recommendations is not an easy affair.
5. The Entry and Exit Game
In order to make the most out of your investments, you need to switch between investment instruments and strategies. But choosing the perfect time for entering a particular position and exiting from it at the right moment is not easy. A bearish market will obviously not stay bearish always, and it is important to exit from it before the bear begins to dominate.
Timely entry and exits are one of the key factors for extracting the maximum profits out of your investments without incurring losses. But for an investor, it is impossible to time the markets. An investment advisor helps you in setting a target and stop loss in order to maximize you profit and limit your losses.
Conclusion
Having an investment advisor can thus prove out to be a boon in your investment journey. But before choosing an investment advisor it is very important to check whether the advisor is registered with SEBI or not. SEBI acts as a watchdog for all the investment advisors. Indirectly, an investment advisor manages your capital and finances and it is thus important for them to be registered with SEBI. In case you feel that there has been a glitch from your advisor’s end, you can approach SCORES which is SEBI’s complain and redressal system.
These are some of the many benefits of having SEBI registered investment advisor. So, having an investment advisor is definitely worth the investment!
