With the increased literacy rate and financial awareness amongst the masses, people are now much more aware of investment and its importance. As a result, the percentage of people who are investors or willing to invest has seen a sudden growth in the last few years.
Retirement planning or that shiny new car, whatever your goal is, a planned investment helps you in working towards it more effectively. However, people are often barred from investment due to a lack of financial knowledge and time constraints. Also, the fear of taking risks keeps them away from the world of investments. This is where investment advisors come into play. Investment advisors provide proper knowledge and guidance to investors and help them invest. Investing with an advisor is often considered to be a lot easier as the investor does not need to go through the technical of the market. All you need is to invest as per the recommendations of your advisor.
Today we will take a look at the need for investment advisors and also study the pros and cons of them to help you figure out whether you should hire an advisor or invest yourself.
Table of Content
Require Investment Advisor or Invest Yourself
Who are Investment Advisors?
Investment advisors are individual professionals or corporate entities who help investors in making investment and wealth management decisions by guiding them through the financial markets. These professionals have detailed experience in the financial world and are certified as well. These analysts conduct technical and fundamental analyses across the markets.
An investment advisor starts his task by analyzing and evaluating your needs or goals. They then analyze your financial situation to calculate the amount of risk you are capable of bearing in the markets. This step is very important because every investment has some or the other sort of risk attached to it. This analysis is known as risk profile analysis or simply risk profiling. Now, they will club your investment goal with your risk-bearing capacity and start providing you with research-based recommendations for investing in the markets.
When Should You Hire An Investment Advisor?
There is no preferred timing for hiring an investment advisor. Whenever you are planning to invest in the markets, it is recommended to have an investment advisor at your service. An investment advisor can help you sail through the sea of investments by utilizing their experience and knowledge to the fullest. However, before finalizing any investment advisor it is recommended to check the advisor for certain things.
First and foremost is that the advisor should be registered with the Securities and Exchange Board of India, commonly known as SEBI. Also, the advisor should have a proven track record in the investment advisory space. Also, the team or analysts should be qualified and should be certified by the National Institute of Securities Market (NISM).
Investment Advisor vs Doing It By Yourself
Investors often prefer choosing the do-it-yourself route for investing in the market. However, if you don’t have proper experience in the market and don’t know even the basics of technical and fundamental analysis, you should stay away from investing yourself. You should take the services of a SEBI registered investment advisor who can help you with your investment.
On the other hand, if you have sound knowledge about the markets and have experience, you can opt for the do-it-yourself route too. However, having an investment advisor is recommended even at that stage of investing.
Conclusion
Whether you invest yourself or opt for an investment advisor, it is very important to have your risk profile evaluated before investing. Having an updated risk profile will provide you an idea about the amount of risk which you are capable of taking in the market. Any SEBI registered investment advisor will never ever provide you any recommendations before your risk profiling. Therefore, whether you opt for an investment advisor or not, you must get your risk profile updated before investing. Most of the advisors offer a free risk profile analysis for investor.
Happy Investing!
