How can you tell the difference between bad advice and a general down turn in the market? I see a lot of bad advisors hiding behind the fact the entire market is down. How can a prudent investor separate the two?
Bad Advisors:
To begin with, professional advisors must have measures for accountability. Their recommendations should reflect the short term and long term needs of the individual investor. The advice should be supported by sound academic research. There should be measures to benchmark the outcomes of a particular direction taken. And there should be clear understandings of historic “worst case” and “best case” scenarios for the options selected.
Bad Markets:
The markets, on the other hand, move randomly. No one can consistently predict the market over time. This adds to risk for investors who participate in the market. Along with the risk there has proven to be a reward for prudent, long term investors in the markets. If you knew for certain that the market will completely recover, would you treat your current invested savings differently?
Conclusion:
As investors, it is our responsibility to hold professional advisors accountable for their advice! Bad advice will never become good advice by itself. Bad advice only gets worse with time! Don’t pay someone to speculate with your savings! We can give you simple tools to measure your investment performance. Call us today!
Professional advisors should be communicating clear expectations for the worst possible outcomes and the best possible outcomes for their recommendations. If your advisor admits to being surprised by the recent market down turn you should be seriously questioning his/her advice. This is not the worst the market has ever delivered! 2008 performance was always in the realm of possibility.
A down market is not an excuse for bad advice but an opportunity for prudent investing.
How can a prudent investor separate Myths from Truths in their investments? Attend our next Free Seminar on August 10, 2009 to learn how.
Seminar: Separating Myths from Truths
Date: Monday, August 10, 2009
Time: 4:00 – 6:00 pm
Place: Our Office – 3300 Eagle Run Drive NE, Grand Rapids, MI