In the world of investment advisors, guidance comes in general and specific forms. Likewise, within the specific forms, there are also business and personal investment sectors. If you're looking at personal investment advisors, you might wonder how this guidance will differ from the other types. You can expect the advice to be different due to these 5 factors.
When it comes to general and business investing, a lot of advice works across domains. At the personal level, everything narrows. Individuals need advice that's narrowly tailored to their circumstances.
While a lot of general stuff still applies, it's hard for an individual to look at their portfolio and make generalized choices. For example, general investing advice tells you to hedge against inflation if you're highly invested in growth tech stocks. That's great, but how does an individual address inflation hedging with their specific exposure?
Things narrow even more when personal investment advisors discuss a client's goals. Someone who is young, unmarried, and childless might focus on aggressive growth strategies. However, a married person approaching retirement may be more worried about sustaining their current wealth in the face of a changing economy. Consequently, most investment advisors would provide very different recommendations to these two people.
At the individual level, a lot of investment advice has to account for the resources a person has. Someone who is currently investing thousands of dollars, for example, may not be positioned to be as diversified as someone handling millions. Personal investment advisors need to be aware of how much of an individual's resources can go into their portfolio.
Every individual approaches investing with a different attitude. Particularly, all people have differing appetites for risk when it comes to investing. An advisor needs to talk with a client about risk and how they plan to approach it. At a personality level, this means advisors have to be aware that some folks will go hard after returns while others will want some security before they get aggressive. Yet others just won't be that happy taking on major risks.
Some individuals have access to less common investment opportunities. For example, a home remodeling contractor may be more interested in real estate than stocks. Advisors have to think about the opportunities while also encouraging clients to diversify their interests. Ideally, an advisor and client can strike a balance so the investor can maximize their returns and stay interested in the process.
For more information, talk to an investment advisor in your area.