Good advisors: They try to talk clients out of putting too much money in investments outside the mainstream with limited liquidity.
6. I’ll have what he is having. They buy a stock or make an investment because someone they know, possibly a peer, bought the same thing.
Good advisors: They try to limit a client’s impulse purchases to a small portion of their overall portfolio. That money is designated high risk. They consider the portfolio like a jigsaw puzzle. All the pieces must fit together.
7. Looking for the next big thing. They have publicists who keep their name in the news. They are looking to score a big success so their name can be associated with the investment, once the general public gets onboard.
Good advisors: They bang the drum of diversification. Look for several big ideas. Do not put all your eggs in one basket.
8. They do not understand what they are buying. They hear about a stock and buy it. They cannot explain why it should work out or even what the company does. They heard about it, so they bought it.
Good advisors: They understand what has to happen wor an idea to work out and a stock to go up. They explain it simply so the client can explain it to others.
Many of these problems can be resolved by finding a good advisor with a solid firm behind them and trusting their advice.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.