Investment Advisors come in all manner of age, motivation, contacts, intellect, financial knowledge, business experience, stock market experience, financial and analytic support from their employers, and so on. Our own experience is that ‘a good one is not easy to find’, and that unless one has a great deal of money invested through a particular investment advisor, it is hard to get the time and attention of ‘a good one’ because they are in high demand. Accepting that Investment Advisors are conscientious professionals who take their client’s interests seriously, we believe many of them are essentially intermediaries who ‘sell’ to their clients the expertise of their employers or money managers their employers recommend. This obviously is a different role than that of an ‘advisor’ who analyzes, either on their own or in combination with their clients, analysts and others, and makes buy, sell and hold recommendations to their clients. In January, 2007 we conducted surveys in both the U.S. and Canada that in part asked questions of investors related to their interaction with their investment advisors. Our questions and the answers, derived from respondents with more than $100,000 invested in publicly traded securities, were:

Do you rely totally on your Investment Advisors?

FusionCharts.

If you do not rely totally on your Investment Advisor, do you provide him/her with input regarding your portfolio?

FusionCharts.

If you do provide input does he/she accept and use that input?

FusionCharts.

How concerned are you that your Investment Advisor might not be totally objective - i.e. that he/she might be influenced by other incentives vis-à-vis the investment advice?

FusionCharts.

The ‘other’ category shown in the second table resulted in commentary from Respondents who misunderstood the question, or in one case reported that he or she had terminated an Investment Advisor relationship ‘because of a conflict of interest’. Because the number of respondents was comparatively small (approximately 200 in each of the U.S. and Canada) we cannot hold these results out to be statistically valid to any close tolerance. However, assuming the results are ‘directionally correct’, ever increasing information availability and Internet use may well result in ever increasing numbers of computer and financial literate investors researching equities and contributing investment ideas and decisions to the management of their investment portfolios. Readers are invited to comment on their agreement or disagreement with the foregoing questionnaire results. Comments with respect to whether investors are increasingly researching investment ideas and communicating them to their investment advisors, and are taking increasing responsibility for their own investment portfolios are particularly welcome.

This entry was posted on Thursday, September 20th, 2007 at 9:19 am and is filed under Stock Research. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.