Introduction

Imagine you’re feeling unwell. You would visit the doctor right? In the same way, when it comes to investing and dealing with market inadequacies, it’s always wise to consult a SEBI RIA fee-only investment advisor.

A SEBI registered fee-only financial advisor offers financial advice that focuses solely on clients and valuing their interests more than anything else. These advisors do not get any remuneration directly or indirectly for the products they recommend. 

Helping you understand five pertinent financial mistakes you can avoid when you approach a SEBI registered financial advisor. Let’s get you started:

• Making wrong decisions on choosing investments

When you approach a solicited advisor who is registered under the guidelines of the Securities Exchange Board of India or SEBI, you can rest assured that you would get the most authentic and pure advice based on your choice of investments. 

Therefore, you would receive the right choices of investments that are really doing well in stock exchange markets or across financial domains.

In a nutshell, you would have a clearer picture of the choice of investments to pick to help you diversify a good investment portfolio.

• Picking an investment portfolio based on randomness

When you choose a SEBI registered financial advisor, you will not choose your asset allocation based on a random or impulsive thought process. 

A SEBI-registered advisor would help you build an investment portfolio and provide his experienced intellect and guidance that can sharpen your decision-making abilities as a newbie investor.

He would help you pick a diversified set of investment options, comprising bonds, fixed-income securities, equities, and mutual funds to name a few.

This way, you do not choose a random investment basket but pick a well-balanced and diversified investment source to help you gear yourself and achieve your short-term, mid-term, and long-term financial goals in a streamlined manner.

• Not having the know-how of market inadequacies

When you start off on your own, you may not understand the know-how behind market volatility. This is in terms of rising or falling trends in stock exchanges and equity markets out there. This way, you might end up losing most of your capital investment money when the markets face severe drips or fall due to impending global and unfavorable economic conditions that are prevalent in parts of the globe. 

However, when you approach a qualified and competent SEBI registered financial planner or advisor by your side, things get easier for you as such. 

Here, the advisor helps you analyze changing market conditions and provides you with valid recommendations and cue cards on what types of investments are not doing so well and what investment options are performing pretty well inside the market. 

Therefore, you get the right kind of guidance on what investments are to be dished out from your investment portfolio vis-a-vis the investments you can make afresh based on the favorable market trends the well-performing investments have on the market. This way, you can build healthier and growing investment portfolios for decades to come. 

• Not knowing how pricing slabs on investments are done

When you start your journey afresh as an investor, you might be carried away by fake financial agencies who recommend investment products that are not only spurious but also levy a tremendous amount of hidden charges in the name of processing fees or administrative fees. 

This is a big-time financial mistake you commit as an amateur or inexperienced investor and this mistake can have a huge bearing on the returns you earn from your investment portfolio on the whole. 

However, when you work with a SEBI registered fee-only financial advisor, you have a clear and comprehensive picture of how pricing slabs are done on different types of investment portfolios. They help you build investment portfolios wherein the pricing is not too much on the heavier side in the name of processing fees./ administrative fees, redemption fees, late payment fees, and so on.

You have a clearer indication of whether your AuM is charged as a percentage value. Or, while you work hand-in-hand or in tandem with a well-experienced financial advisor, you are charged with a fixed fee slabbing. There are a few independent SEBI-registered financial advisors who could also charge you on an hourly basis indeed.

The advisor, therefore, clearly indicates the basis of charging on your investment portfolio with no hidden charges involved whatsoever. This way, you could have a more transparent picture of what the value of the portfolio is while you deduct minimal charges and then take the net value of your investment based on the returns you earn from your investment portfolios. 

• Having an unobjective and biased overview of how investments work

When you work as a stand-alone investor, you may have a biased opinion on how various financial instruments and investment options work. Here, you might get confused by the hearsay of inexperienced or amateur investor colleagues who may also sail the same boat as you are in. 

This is a financial mistake you can avoid when you have a SEBI registered fee-only financial advisor by your side. 

Since a SEBI registered financial advisor has put in enough years in the investment domain, you would get a clear-cut understanding of how investments work and how you choose your financial instruments from a pool out there. You receive ethical guidelines on how to build healthy-earning investment portfolios. 

This is because the SEBI registered advisors provide you with unbiased advice on investments and finances and do not give you misleading pieces of advice on how to proceed further. They help you understand the dos and don’ts of investing in an unbiased and objective manner. 

Conclusion

A SEBI-registered fee-only financial advisor is supposed to work keeping their client’s investment requirements and work accordingly. The advisory personnel are not supposed to promote financial or investment products with the solo intention of earning extra commissions or add-on incentives. 

Therefore, a SEBI registered financial advisor would work ethically in guidance from SEBI towards helping investors on an unbiased and objective note. 

What are your thoughts on this? Do let us know in the comments below!