Can you trust your advisor?


Can you trust your advisor?

The Sterling Report


Sunday, June 16, 2019

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W hen you visit a doctor, if you want to elicit a negative reaction, tell them that you read on Google something different and see how annoyed they get. Let's face it, if you could do everything by yourself, then you wouldn't need specialists, right?

However, there are a lot of gray areas in between. Why is this? Finance is by no means a precise science. There is theory in abundance, and varying levels of complexity in the field, but in the final analysis, the question is: how much can you trust your advisor?


Let's revisit the example of the doctor. Even the best doctor in the world can make a mistake, so it is not unreasonable to ask questions. The type of questions that you pose will depend on your own personal level of education and knowledge, combined with personal experience.

It is no different with investments. But where do you begin? If you are not familiar with the investment at all, you are likely to have so many questions — that you ask none.

If this is the case, just don't invest in something you don't understand. There have been many clients who complained that they followed the advice of an advisor and they got burned. In the aftermath of the loss, they do their own research, and make up their own mind. Even if you are a beginner, take the time to understand what you are doing.

There is nothing wrong with trusting your instinct. If you feel strongly that the investment is not a good option, just don't invest. An advisor is there to give you options, but the final decision is yours.

We know that you may feel a little disappointed if you pass on the investment, only to hear later how fabulously it is doing. This is natural. However, losing a lot of money on an investment that you already had serious doubts about from the beginning is a recipe for bitterness. You will blame the advisor and yourself.

Without a crystal ball, an advisor is simply giving you their best opinion, based on the information at hand. This is why it is so important that you ask as many questions as you need to feel comfortable.

Finally, acknowledge that in the world of finance, investments go up, they go down and they stay flat. You can't time investments and you can't blame someone for not knowing that a significant event was about to take place.

Good instincts take a while to develop and this is usually borne from experience.

If you are a beginner in the investment world, your advisor will have to do a lot more hand holding. However, there are advanced clients who only need their advisors to facilitate their transactions. They know exactly what they want, and they trust their instincts. In many of these cases, the advisors learn from these clients.

If the investment is completely new to the market, many clients will call and ask for an opinion. In fact, the majority of them will discuss the investments with up to three different advisors if they really aren't certain what course of action they should take.


Advisors have certain advantages, namely: they are in a position to receive information on new issues quickly. They generally have the benefit of the company's research team, as well as external research on various investment offerings. Their traders usually have up-to-date information on the market perspective on newest offering.

Is it being swamped? Does no one care? It's good to get this type of feedback — you can incorporate it with all the research that you have.

I just gave you some of the benefits of having an advisor, but what are the drawbacks? The main one is the advisor who has been given an aggressive target and may be selling something to you that is not a good fit.

If you are not comfortable with your advisor, you can always request a new one. Advisors also differ with their knowledge level. However, some companies allow you to speak to other specialists in the company to get more information. This is worth taking advantage of.

The relationship with your advisor is a very important one. They need to know what is important to you and what your goals are. Once they get to know you, they won't waste your time with investments that won't be of interest to you. There will always be other investments, so it's not the end of the world if you pass on something.

Once it feels right, you should go ahead.

Lastly, in the same way that you take your time to find the right doctor, you should also take the time to find the right advisor.

Yanique Leiba-Ebanks, CFA, FRM is the AVP, Pensions & Portfolio Investments at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at Feedback: if you wish to have Sterling address your investment questions in upcoming articles, e-mail us at info@ .

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