Column: Financial advisers are key to investors’ success in the market

By Pablo Fuchs

The rough stock market tumble has not only changed the value of investors’ portfolios, it has also changed the way people invest.

Before the stock market’s bubble burst, many investors were playing the market on their own, using “do-it-yourself” brokerage houses such as TD Waterhouse. By using these services, investors were saving money by paying only $30 per transaction rather than the financial advisers’ fees of $120.

This worked well from early 1999 to late 2000, when people were making money all over the place. It wasn’t necessary to ask for help from professionals when one could make money regardless. But how quickly times have changed.

A common phrase among investment professionals is: “don’t confuse a bull market with intelligence.” At the time of the economic boom, nobody would’ve thought twice about this. But with the recent collapse of stocks across the globe, it shows that only the truly intelligent investors knew what they were doing.

The investors sitting pretty at the moment are those who contacted their brokers and sought advice from them. With stocks plummeting, amateur investors are selling off all their properties, salvaging whatever is left of their money.

However, financial advisers are telling their clients quite the opposite as they continue to preach the cardinal rule of investing: buy low, sell high. As amateur investors look to dish off their $25-a-share Nortel stocks, brokers are telling their clients to “buy, buy, buy!” Although it may be difficult for this company to regain the $125-a-share level it saw during last year’s boom, it’s quite inevitable that it will double or triple sometime in the coming year. A company of Nortel’s stature will rebound and not disappear into the sea of failed dot-commers.

As a result of the change in the market’s fortune, investors have begun to flock back to advisers to guide them during this unpredictable time. Mind you, brokers don’t have magic crystal balls that tell them what’s bound to happen in the next year, but they do have unmatched knowledge of the marketplace.

Financial advisers look at, examine, and analyse the occurrences of the stock markets every single day. That is their job. Meanwhile, an amateur investor who works nine to five every day does not have the time to spend sifting through financial reports for eight hours to examine current trends.

Therefore, it is essential that investors no longer do things on their own, and begin to pay professionals to do the job. As much as lost earnings and unmet expectations are to blame for the current market downfall, so too are amateur investors for selling off stocks when the time is right for buying.

During this tumultuous time, it is necessary for investors to go back to financial advisers for their help. Only they are equipped to advise investors on the best place to park their money while the slowdown runs its course.