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Commentary: What to expect from a financial adviser

The majority of investors seek the advice of an investment professional in some form as they go about the business of saving, investing, and eventually generating retirement income. Some individuals are able to manage their own investments, recognizing they have the ability to make sound decisions, and the time to devote to the research necessary to do this well. Many do-it-yourself investors find staying the course of a disciplined investment plan difficult, especially when we experience the extremes of the greed and fear cycle of investing.

Do you need an adviser? As the owner of a registered investment advisory firm, I admit my opinion is biased. Some people don’t need direction and help in managing their investments, but most I observe do need help at some level. The interesting part, if we step back for a moment, is that such a large number of people think they are able to manage their investments, but yet these same people hire professionals to perform all the other important tasks in their life. You don’t work on your own air conditioner, prepare your own estate planning documents, or perhaps prepare your tax return, unless these happen to be part of your chosen profession.

Why then do so many investors take the management of their financial future squarely upon their own shoulders? There are a couple of answers I believe are obvious. First, the large Wall Street firms have one of the worst reputations of any industry. Investors are scared to deal with this establishment, and in many cases rightfully so. But then again, there are alternatives for investors seeking independent advice.

Secondly, the availability of information to make investment decisions is now easy to obtain, and in many cases free for the taking if you know where to look. Of course, I can read a book on brain surgery, but I’m not going to operate on myself, or anyone else for that matter, without proper training.

So, what should you expect from an adviser, whether it be your current one, or one you may be looking to hire? Perhaps we should start with what you should not expect. Don’t expect your financial adviser to be a global macro-economist. Few financial advisers or economists predicted the magnitude and durations of the 2008 financial crisis, and they are likely to miss the next one that comes around as well. Does your doctor predict every illness you will be afflicted with in advance of it actually occurring -- not likely.

Don’t expect you personal adviser to “beat the market.” Some will, but it’s not necessary to beat the market to be a successful investor. If he or she ends up providing above average returns, great, but it is probably more important for them to control the risk in your investment plan so you can survive the emotional pain points of decision making, and avoid the mistakes that doom many to sub-par returns.

The great Benjamin Graham (Warren Buffett’s professor at Columbia University) wrote in his 1948 classic “The Intelligent Investor,” that the primary role of the financial adviser was to help the client avoid making mistakes. What you should expect from your adviser is honesty, leadership through the tough times, and an overall unbiased approach to their recommendations.

I wish you well with your investment efforts in 2011.

Tom Breiter, is the president of Breiter Capital Management, Inc., a registered investment adviser. He can be reached at (941) 778-1900 or by e-mail at