It seems very exciting to get some investment advice for free that can help one make quick bucks. But do you know, what one perceives as free advice could be very expensive?
The case in point is the so-called “free” advice on crypto investments from financial influencers.
A few key problems with “free” advice are:
– Not customized to you: People who advise for “free” are either giving a generic gyaan, pushing some products or are talking about investments that suit their own risk & return objectives and not yours. You & your circumstances are unique and so are your risk and return objectives. Good investment advice should be customized to your specific requirements.
– No follow-ups: You usually get recommendations to buy a scheme/stock/product but you do not get follow-up advice on when to sell what you bought. That’s why a majority of people get stuck with duds in their portfolios.
– Hidden costs & agenda: There may be hidden costs in terms of commissions or kickbacks that are not explicitly disclosed while making the sale of any product. The recommendation on online channels could also be a promotion of products sponsored by the companies. Thus, there is a clear conflict of interest as what you hear for “free” is a sales pitch and not genuine advice. You should know by now that if you are getting something for free, you are the product.
– Managing behavior: More than product selection, successful investment requires a lot of discipline and patience. Like a fitness coach who sets rules to help you stay fit and healthy, you need an experienced financial coach to save you from yourself (i.e. emotional decision-making) and ensure your finances remain in the pink of health.
Free advice from influencers or unregistered advisors doesn’t look too risky as many think that investment advice may not require too much effort to master. In reality, investment advisory is a very sought-after high skilled profession that requires an understanding of not just investment concepts & product information but knowledge of history, macroeconomics, interpersonal skills, and human psychology. A good financial advisor should ace all of these aspects. On top of it, a fee-only SEBI Registered Investment Advisor would ensure your and his/her interests are aligned.
Do you still want free advice? 😉
Originally posted on LinkedIn: www.linkedin.com/sumitduseja
Truemind Capital is a SEBI Registered Investment Management & Personal Finance Advisory platform. You can write to us at connect@truemindcapital.com or call us at 9999505324.
