Finding Your Fiduciary Financial Advisor
When you are selecting or retaining a financial advisor, how do you know if you are making the best choice?
Welcome to the final installment of our Evidence-Based Investment Insights: Bringing the Evidence Home. We hope you have enjoyed reading our series as much as we have enjoyed sharing it with you.
Here are the key take-home messages from each installment:
1. You, The Market And The Prices You Pay: Understanding group intelligence and its effect on efficient market pricing is a first step toward more consistently buying low and selling high in free markets.
2. Ignoring The Siren Song Of Daily Market Pricing: Rather than trying to react to the market’s ever-changing conditions and cut-throat competition, invest your life savings according to factors over which you can expect to have some control.
3. Financial Gurus And Other Fantastic Creatures: Avoid paying “experts” to forecast your future moves for you. The evidence indicates that their ability to persistently beat the market is more likely to be fleeting than fantastic.
4. The Full-Meal Deal Of Diversification: In place of speculative investing, diversification is among your most important allies. Spreading your assets around dampens unnecessary risks.
5. Managing The Market’s Risky Business: All risks are not created equal. Minimize concentrated risks (timing markets and picking individual stocks) by diversifying away from them. Maximize long-term returns by holding large swaths of the market, building in systemic investment risks. Diversification helps manage the necessary risks involved.
6. Diversifying For A Smoother Ride: Diversification can also create a smoother ride through bucking-bronco markets. It helps you stay in your seat and on track toward your personal goals.
7. The Business Of Investing: At their essence, market returns are compensation for providing the financial capital that feeds the global human enterprise going on all around us.
8. The Essence Of Evidence-Based Investing: What separates solid evidence from flimsy findings? Evidence-based insights demand scholarly rigor, including an objective outlook, robust peer review and the ability to reproduce similar results under varying conditions.
9. Factors That Figure In Your Evidence-Based Portfolio: Building on 70+ years of robust evidence-based inquiry to date, three key stock market factors (equity, small-cap and value) plus a couple more for bonds (term and credit) have formed a backbone for many evidence-based portfolio builds.
10. What Has Evidence-Based Investing Done For Me Lately: Building on our understanding of which market factors seem to matter the most, we continue to heed unfolding evidence on best investment practices.
11. The Human Factor In Evidence-Based Investing: The most significant factor for investors may be the “human factor.” Behavioral finance helps us understand that our instinctive reactions to market events can overtake our logical resolve as reasoned investors.
12. Behavioral Biases – What Makes Your Brain Trick: Continuing our exploration of behavioral finance, we share a half-dozen deep-seated instincts that can trick you into making significant money management mistakes. Here, perhaps more than anywhere else, an objective advisor can help you avoid mishaps that your own myopic view might miss.
When we introduced our 12 Essential Ideas for Building Wise Wealth, we promised to skip the technical jargon, replacing it with three key insights for becoming a more confident investor.
1. Understand the evidence. You do not have to have an advanced degree in financial economics to invest wisely. You need only know and heed the insights available from those who do have advanced degrees in financial economics.
2. Embrace market efficiencies. You do not have to be smarter, faster or luckier than the rest of the market. You need only structure your portfolio to play with rather than against the market and its expected returns.
3. Manage your behavioral biases. Since you cannot eliminate the emotions you experience as an investor, you must remain vigilant to how often your instincts tempt you off-course, and manage your actions accordingly. (Hint: A professional advisor can add huge value here.)
If you are interested in continuing this conversation with our team, we encourage you to reach out to us at your earliest convenience by calling (732) 876-3777.
This post was written and first distributed by Wendy J. Cook.
DISCLAIMERS
This material is intended for general public use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. This is not an offer to buy or sell a security.
Shore Point Advisors is an investment adviser located in Brielle, New Jersey. Shore Point Advisors is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Shore Point Advisors only transacts business in states in which it is properly registered or is excluded or exempted from registration. Insurance products and services are offered through JCL Financial, LLC (“JCL”). Shore Point Advisors and JCL are affiliated entities.
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