Stock market is a field that requires time and experience to understand the mechanics and realize the profits. A person who has practiced normal investment for quite some time can make a reasonable return with investing but for good returns it would be better to consult an expert. If you do not want to select stocks yourself, then you should still think twice before choosing the stock advisor as you may lose your hard earned money with them if not selected properly with proper homework . So it would be good to find and hire the stock market expert advisor that can park your hard earned money in proper stocks that can build wealth over a long period of time or help you trade wisely in the short term with proper money management. A stock advisor can be a friend, a family member, a licensed professional, or a complete stranger on the internet. Below is the checklist to consider while selecting a stock advisor for your long and short term stock advising activities.
First you need to know that stock market investments advising are not legal for everyone but there are many advisors that are still not registered with SEBI. So first you need to check whether they are registered with SEBI or not, you can visit the SEBI website for the same. SEBI Registered Research analyst needs to fulfill all the norms properly so your capital and advising remains in the safe hands. If your advisor does not meet the criteria laid down by SEBI then you have the right to stand for the same.
A prospective client should always do their homework before hiring someone to give financial advice or before purchasing his/her recommendations. A good point to start with is the age of the advisor in the market. A stock advisor has been practicing for at least 10-12 years and has been successful during this time period.
One consideration before hiring someone is to check his past performance, it should be checked on both the level, the returns of the stocks he recommended and the returns of the portfolio as a whole. For example, if you want an advisory service for stock, you need to know the long term performance of his portfolio and compare it with the index in the same duration.
Before you hire a stock advisor, make sure they have been researching and recommending the companies by studying with data of at least 5 years, if long term recommendation, which can be seen from their research reports. If they haven’t been able to produce quality research for this amount of time then it may not be a great fit. You can also check the parameters they consider whether they use technical analysis or fundamental analysis before recommending the stocks. Don’t worry if they can’t commit you to the returns on a yearly basis, the important thing is the level of knowledge and long term return they would provide.
If you are talking to an advisor about what stock they might recommend then the answer is obvious: the stocks with good returns potential. But now we need to think about the second side also, do they explain the risks or just focus on the returns. Here is what you should be looking out for, be aware that if they ask about your risk potential or not while recommending you the packages or they just try to allure to select the package based on the returns they can give. When searching for a stock advisor, watch out if they spend too much time talking about returns and risk both.