Commentary: CFA vs Common Sense 14/10/11

Date of publish: 10/14/2011

For Financial week: 10-14/10/2011

Written by Matthew McCreath

 Commentary: CFA vs. Common Sense

     I've always wondered this, why is it that a qualified analyst can come on CNBC and I an unqualified viewer can say that he/she is talking utter foolishness. How is this possible? What does he/she have that I can’t learn for myself? Can the average Joe perform better in the financial markets than a licensed portfolio manager? Are you better off paying a professional to run or advise you how to run your money, or can you go it alone?

     It is important to note that there are many hard-working financial professionals out there; people who not only work hard to deliver the best results for their clients but also the best service possible. It is also important to realize that advanced tools can be just as important as instinctive (or acquired) genius. Most financial services firms give their brokers and advisors access to powerful databases and advanced financial planning tools that can help predict future needs or market swings and recommend optimal strategies for any client.

     The most fundamental problem with financial advisors is that they are salesmen first and they are paid as a result. If you want to surpass your advisor in knowledge and aptitude, the most important thing to do is read. There is no end in the learning process for an investor, and likewise no end to what can be learned.

     There is no shortage of reading material when it comes to learning about markets, companies and industries. An investor can learn a lot about a company simply from freely-available reports, business publications, as well as various articles found freely on the internet. If the average Joe hit the books while they hit the golf course, it doesn't take long to catch up.

     Many people find investing to be a mystery, an inconvenience or simply do not want to take on the responsibility of managing their own money. I think many people are not only able to match the abilities of their advisors but outperform them and should take more responsibility for their money.