We would much rather spend money now than save it , or hedge against catastrophes that we hope never happen . But knowing that our adviser is waiting for us at the next portfolio review session makes us think twice - it is embarrassing to be seen as ill-disciplined and impetuous !
A good financial adviser also protects us from our emotions , fears and downright stupidity . It is easier to be objective and rational when you advise somebody else on his / her portfolio than when it ’ s your own money .
Benjamin Graham , Warren Buffet ’ s mentor , said that the biggest investment risk of all is the person in the mirror . That person is very vulnerable to fear and greed , and needs a rational voice at times . An objective and rational adviser has a balanced perspective . Compared against a possible loss of say 10 % or 20 % of a portfolio when greed or fear had led to silly decisions , an annual fee of a few basis points does not seem so high .
The third point is that a good adviser asks good questions .
Sometimes it is about things that we do not really want to think about . Those whatif scenarios . A good adviser might see what waits around the next corner . They then follow through with the actions to address those possible scenarios . But some questions are also about good things , like : “ How do you want to live your life in your seventies ?” which will be followed by “ OK , let ’ s plan to make that happen !”.
A good financial adviser introduces professionals to his / her own network of
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