Three Tips for Finding a Superior Financial Consultant

If you are frustrated from having one financial advisor after another financial consultant offer you inadequate earnings on your stock profile, then I desire you read my first article "Three methods for finding an excellent financial consultant". In this specific article, I will drill down even more too essentially hammer home those factors.

Finding an excellent financial consultant in India is not always about the financial consultant. It is sometimes also about you. Do you want to make the commitments to discover a superior financial consultant also? In this specific article, I will discuss yet another crucial behavior about financial consultant and two about the behavior of you, the financier.

Three more factors:

(1) Do not keep any mutual funds.

(2) You should not be stingy if you discover a superior consultant.

(3) Show patience and ask plenty of questions in your visit an expert financial consultant.

Do Not Hold Shared Funds.

Without any doubt why I am not really a fan of shared funds. Mutual funds have so many concealed fees that it is often difficult to learn just what your costs are. Besides in advance costs that may be upwards of 5% for a few funds, there are 12b-1 advertising, marketing and circulation fees that range between 0.25% to 1.0%, administrative fees that range between 0.20% to 0.40% and undoubtedly management fees paid to the shared fund supervisor of 0.50% to more than 1.0% on a yearly basis. This would not even include undisclosed "soft" costs of trade commissions that can truly add another 2.0% to 4.0% in costs. And yes you didn't improperly browse the first part of this last phrase. Many mutual funds ask you for 12b-1 expenditures they incur from advertising and advertisements that urge you to definitely buy their fund, and if you are buying no weight funds, it’s likely that that your 12b-1 fees are greater than average.

Add to this, intangible costs such as the performance that is sacrificed to maintain the necessary level of liquidity to satisfy share redemption, and your costs become even greater. For a fund that turns over 100% of its assets annually, Roger Edelson of the University of Pennsylvania Wharton School estimated this sacrificed performance to be 1.5% of returns annually. Lastly to add insult to injury, sometimes fund managers sell out of their biggest winners to meet liquidity needs, generating a capital gains income tax for you, the investor, even if the mutual fund lost money that year.

But this isn't even where the negative traits of mutual funds end. If you have one of the many financial consultants that merely try to jump on the hot emerging market bandwagon by buying mutual funds in China, India, or any other country, I advise you to exercise extreme caution. When pullbacks happen in these country's economies as will inevitably happen, you are at high risk of losing money quickly. Why? In a mutual fund, you are at the mercy of a herd mentality that more often than not, will induce panic upon the release of bad news, and cause millions of investors to redeem their shares over a short period of time. If this happens, fund prices will plummet before you even knew what hit you.

But if you choose to own just the best stocks in the best industries in these countries, most likely your stock prices will be much more insulated and less volatile in such a scenario. While these stocks may still decline, they will most likely decline a lot less than the fund will. Strong companies' stock prices tend to weather country-wide economic downturns much better than fund prices, and if they are in the right niche, they may even continue to flourish.