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Finding someone you trust to help you with advice for your portfolio is not easy. Plenty of people will tell you they can provide the services you need, and to be fair in many cases, that will be the case. But is that really enough?
Unfortunately, the time you will find out is at a time like this – when markets are at their most volatile, and it is hard to tell what is going to happen next. The last minute deal between President Obama and Republicans to prevent the USA defaulting by extending its borrowing limits to eye-watering levels has helped to keep the world economy from falling into an abyss.
But a downgrading in the US credit rating, coupled with fears about the economies of Italy and Spain following a second Greece bail out, and major falls in world stock markets means there is plenty of fear in the financial markets at present. Gold, a traditional safe haven when other investments are troubled, has reached a record high of $1,700 per troy ounce.
Investors are scared, and it is no wonder given the levels of market falls. The MSCI World Index fell more than 5 per cent in a single day on August 8. People are tempted to make snap decisions, to ‘sell everything’ before they lose it all.
But that would be the wrong thing to do for most people – if you can afford to hold onto your investments, then you will do better to hold your nerve. Selling now would crystallise your losses, but brave investors could improve their lot when the upturn comes by buying more shares when the markets have fallen. You need to have a strong stomach for this strategy.
So, the person you would need to rely on to give you the right information, to help you make the right decisions – which could be to sit tight and do nothing – is your financial adviser. One thing that is for sure, at times like these, you need to know you can trust their judgement.
Finding a good adviser, particularly offshore, is not as easy as it might seem. Yes, you could trawl the internet and find a company that ‘tells’ you how good it is. But remember, many of these people are salesmen first, advisers second – and what better product to sell than yourself, right?
Not everyone will be lucky enough to get a recommendation for a good adviser, but ideally you should look to use an adviser that is recommended if you can. Ask around, speak to people you work with, those you socialise with at the golf club, the theatre, the gym, or even at your children’s school. If that search is fruitless, do your own research, but always compare one adviser with another.
No matter how you find your adviser, you need to make sure you are comfortable with him or her. That means spending some time getting to know them, and asking the right kind of questions. Let me tell you something, there is no such thing as a stupid question, and if the adviser you are talking to makes you think that is not the case, they are not going to be the one for you.
Remember, you need to interview your adviser, after all you are going to be paying him or her to do a job. You need to make sure they are up to it. Find out what you want to know, how long have they been doing this job, are they regulated, and if so who by? What areas are they specialists in? Are they independent, or can they only tell you about the products from a particular company?
Also, what happens if you decide you are unhappy with the advice you are given? What processes are in place to deal with any problems? How often will you be contacted to review your affairs?
If you do not get the answers you want to these questions – and anything else you want to know – then move on to another candidate. You need to ‘get on’ with your adviser too, so even if you get all the right answers, if you are still not happy, then don’t put up with second best. Sometimes, it is simply a gut feeling that makes you feel uncomfortable. If you have that, I would go with it. If something feels wrong, then it probably is.
I can’t tell you who is the right adviser for you, all I know is that if you take a bit of time to do your research properly, you will find the right adviser, and it will be someone you can trust to help you through volatile times like these.
First published in Expat Lifestyle