When Investors Are Intolerant Of Their Advisers’ Views

Let me clarify at the outset: I’m neither weighing in on the ‘intolerance debate’, nor do I have an opinion on what to do with awards :) Recently, I ran into an acquaintance who is an investment adviser. Expectedly, the conversation veered towards markets, clients and investment avenues. The gentleman had a rather peculiar complaint. He said “my clients engage me for investment advice, and I am paid a fee for the same; oddly, some of them simply expect me to reinforce their views”. To further complicate matters, his dissenting views were not only met with resistance, they even led to investment decisions being delayed.

This phenomenon is more common than one would imagine. Over the years, I have encountered several investors whose expectations from their investment advisers are no different. At the risk of hazarding a guess, perhaps such investors have an opinion on where to invest, and need advisers for validating their views. Conventional wisdom suggests that the adviser is an expert on investment-related matters; furthermore, he is engaged to help investors achieve their investment goals. Hence, it makes sense to be receptive to his views. 

I’m not suggesting that investors should blindly follow everything their adviser recommends. Not at all. I have always maintained that investors must actively participate in the investment process. An integral aspect of the same is to be informed and to thoroughly discuss the adviser's views and recommendations.  That said, expecting an adviser to simply reinforce the investor’s preconceived notions defeats the purpose of engaging an adviser. Investors and advisers who find themselves in such a scenario have much to mull over.

On their part, investors must evaluate if they are capable of handling investments on their own. If the answer is affirmative, then such investors are better off dissociating from their advisers.

Now for the more tricky one—investors who need investment advice, but are unwilling to accept any from their adviser. There is a need to assess why the relationship isn’t working. It could be a case of losing confidence in the adviser on account of failed recommendations, or perhaps the investor realising (with the benefit of hindsight) that his views on investing are not in sync with those of the adviser. Sadly, this conundrum doesn’t have a one-size-fits-all solution. However, investors owe it to themselves to go to the root of the problem and resolve it. 

The relationship between an investor and his adviser must be symbiotic. While the adviser is expected to pitch in with independent and credible advice that is apt for the investor, the investor must diligently act on the advice, and compensate the adviser as per agreed terms.  An investor-adviser relationship operating on the extremes—either the investor following the adviser blindly, or the investor being cynical of everything the adviser recommends—is bound to fail. The key lies in finding a common ground.

On a parting (and lighter note), apparently my acquaintance has decided to practice intolerance by discontinuing dealings with his unreceptive clients.