Is only having financial knowledge enough for an equity investment advisor? To provide efficient, safe, and growth-oriented investment services to clients, an equity investment advisor needs to have an open mind and imbibe new ideas. Honesty, transparency and skin in the game are paramount.
A good investment advisor will keep the client at the center and strive to serve their unique needs. Here are a few essential qualities that an equity investment advisor needs to possess:
Should not only focus on returns
While earning good returns is important, getting too greedy for returns without considering the investor’s risk appetite is a big no-no. If you think your equity advisor is just after the returns without accounting for the risks and your financial goals, it is time you reconsider your equity advisor.
Watchful for the risks
Though they are high earning, equities are one of the riskiest investments. Therefore, risk appetite is one of the critical parameters of developing an efficient and goal-oriented investment plan. Investment advisors must accurately determine their clients’ risk appetite before they suggest any investments to them. Understanding the market trends and the risks associated with them is an irrefutable essential for an equity advisor.
Better safe than sorry – the conservative way
It is a common practice among equity investors to look for small-cap stocks and minor companies in a hoard to make big profits. However, most of these companies have poor corporate governance, making the future of such businesses uncertain. The conclusion— as an equity investment advisor, it is much better to be conservative than flamboyant.
Well-informed and eager to learn
Having knowledge of investment, financial, and information laws and regulations is a core part of the job of investment advisors. It is one of the primary responsibilities of the equity investment advisors to keep themselves updated with the current market news, trends, and practices.
Integrity – no hidden/ indirect fees or commissions
For anyone to trust you with their money and financial life, you need to primarily build that trust. One key component to creating a collaborative client-advisor relationship is to be transparent. This transparency needs to extend to the payments and fees. A trustworthy investment advisor will reveal all the fees right at the beginning of the partnership and will levy any hidden or indirect fees on his/her clients.
No direct dealing with money
A contactless way of dealing with investments is a best practice that all equity investment advisors need to follow. The visibility of the end-to-end transaction is possible for the client if there is a no-touch policy by the equity advisor.
Doesn’t get carried away by emotions
Everyone will have their personal opinions about the market trends. However, an efficient investment advisor will stay analytical and logical even in tumultuous times — market crashes and economic turmoil. Similarly, the advisor should not get swayed by the highs of the market.
Safeguarding sensitive records:
Apart from creating and monitoring investments, it is an equity investment advisor’s responsibility to protect the client’s sensitive financial information. It also essential to maintain detailed records of the assets and services you offered. Such sensitive information would include disclosure statements, signed contracts, advisory reports, and similar client documents. These client documents should also include payment receipts, invoices, and details about the services provided. Government regulations also mandate such safety measures to maintain documentation and protect information.
Update market and regulatory knowledge:
Having knowledge of investment, financial, and information laws and regulations is of paramount importance to investment advisors. The guidance provided by the advisors needs to be in the purview of the law, and keeping at pace with the current rules and their modifications are essential to provide accurate advice.
Ethical and moral compliance:
Being ethical is integral to any business function across the spectrum. It is especially important in the investment field — which involves dealing with sensitive financial data. Business ethics is an essential quality for any investment advisor.
Regardless of how skilled, experienced, and well-versed an investment advisor is, the qualities mentioned above are a must-have to build strong client-relationship and provide effective services.