Advice received, does not mean action must follow. Even though we have been conditioned to believe this is the case.
When you speak to your accountant their advice generally results in you taking action to reduce tax. Lawyers are the same; you generally consult them, as you want to take an action, such as buying a house.
When dealing with Financial Planners or Financial Advisers you need to be careful when you get advice. Here are two common mistakes people make.
1. Are you getting advice or are you being sold a product? The first clue is how you pay for such advice. If the advice is paid on purchase, (or if there is no fee if you do not go ahead) then you did not receive advice you got a sales pitch.
2. Advice from a Financial or Investment Adviser does not always lead to some sort of action. It is common for investors to expect that every time their adviser contacts them that there will be some buying or selling. Quite often there is no need to make changes, and a hold and wait strategy is just as profitable as a buy or sell strategy.
It can be misinterpreted that when an adviser tells you to do nothing that they are lazy or are not across the market and what is happening. In fact, as a professional Investments Adviser I work harder when there is nothing to do than when there is.
Professional Investment Advisors are always looking for some way to make their clients money, simply because the better the clients do, the better the advisor does.
When markets are very bullish there are always plenty of ideas and actions to take or follow.
However, in a Bear market it is much more difficult to find a good opportunity for your client. You have to work through a lot more data to find the right idea.
Professional Investment Advisers spend a lot of their day reading through financial statements and research on different companies, looking up the most recent announcements, looking at economic data to try and find a good idea for their clients.
Sometimes the result of all of this hard work is to sit tight and keep looking.
It is easy for investors to get that burning feeling in their pockets that they want their money working harder for them and as such they start to take more and more risks. If your investment adviser tells you to sit put, you should listen.
Sometimes saving you from losing money is worth more than an idea that makes you money.
There is not a good idea every day. If your adviser tells you differently, you are being sold.
Investing is a long-term game and Value Investing means that you need to look for the right opportunity to buy.
It is like waiting for the Boxing Days sales. Sure before Christmas you are in spending mode. But, if you just hold off a couple of weeks you make big savings. Big savings mean more in your pocket.