In the February 2011 Australian Property Investor (API) magazine, Christopher Joye in his article “Here are my top investment tips” gives some advice as follows:
“Before proceeding with any investment, I would encourage you to consult with a qualified financial advisor.”
So, I quickly set out to discover what is a so-called “Qualified Financial Advisor (QFA)?”
My first step was to find the definition. I couldn’t find one for a QFA; the closest I came was for a “Certified Financial Planner (CFP).”
“A title conveyed by the International Board of Standards and Practices for Certified Financial Planners. A Certified Financial Planner must pass a series of exams and enroll in on going education classes, as well as have obtained a Bachelor’s Degree from an accredited institution. Knowledge of estate planning, tax preparation, insurance, and investing is required, as it at least three years of work experience in a related field.“
Source: InvestorWords.com
My search also lead to an article titled, “How to choose a Qualified Financial Advisor.” The article is “eye opening” and contains some hard hitting, unflattering insights as follows:
“Obtaining a securities license simply makes it legal for a financial advisor to receive commissions on the sale of investment or insurance products: it does not mean they have the knowledge to provide quality advise.“
But, the article does go on to imply that you should find a QFA; just make sure you find the right one. The article contains extensive links for those who want to delve into the search further. For instance, one article is titled, “5 Questions to ask a potential Financial Advisor.”
Another good article on the subject is titled, “How to find a Qualified Financial Planner.” This is provided by eHow.com and even gives a set of instructions; essentially a written procedure on how to find a QFP.
Now, that I more or less know what a QFA is, am I going to go out and look for one? Am I going to hire one?
Probably not.
I’m not looking for someone to manage my finances. I’m not looking to someone else to make me financially wealthy.
I’ve hired out my finances on occasion and the results have left me wanting; badly. Different people, different institutions; same results. I just seemed to be a money conduit for these people and/or institutions. They had control, I didn’t. I gave up my control when I said, “Here, take my money, make me rich!” They were good at the first part, but couldn’t seem to work out the second! Funny that! I trusted them. They seemed to have all the trappings of success. They seemed to have “the walk” not just “the talk.” They even had formal credentials and/or the backing of a trusted institution. What could go wrong?
Everything.
From my experience, I’ve learned two valuable lessons.
Next, always have an margin of safety. Never “swim naked” as Warren Buffet calls it. If some “expert” tells me, “You can’t lose!” I make sure the claim is backed up; make the expert accountable. I’ll do something like, ask for a guarantee – in writing; then watch the expert turn and run.
For more ideas on the “safety margin” concept, I’d recommend reading, The Snowball: Warren Buffett and the Business of Life. I’m about half way through this very long book and I find it fascinating and educating. Warren stresses the concept of having a built in safety margin in every deal.
It was during an especially dark financial time when I learned to trust myself. I trusted myself to go out an make back the losses. I saw a widow of opportunity in property. I saw the opportunities and I didn’t want to miss them. I struck. Even though I was feeling distressed about giving up control in other investments and watching the losses mount, I still struck when I saw opportunity. I was motivated. I wanted to make up for these losses. And, I knew I could do it by sticking to what I know; property.
You can read about it in my “Too Weak to Defend” article series.