Investors are those who have either worked hard to amass large sums of money, or those who were born into it. Regardless of how investors make their money, investors sometimes behave in risky ways and might end up losing their money. The biggest factor that determines whether an investor will prosper with his investments is their emotional quotient and their behaviour. On average it has been noted that investors do not stick to a proper plan regarding their investment habits, and tend to waver based on the tendencies of the market.
Some of the characteristic behavioural attributes of the average investor include personal biases. The personal biases tend to make investors buy in when the market has risen (giving them the false illusion that it will continue rising) and selling at the bottom (in the hopes that they can pre-emptively reduce losses by selling before it gets lower). However, these practices are highly risky, as they tend to spell doom for these investors. This is the reason why most investors will hire a financial advisor in Australia to help with their investments.
In days past, a financial advisor in Australia would generally assist the investors by pointing out fund managers and stocks that have good potential. But of late, even the average financial advisor has noticed that an improvement in the investor’s behavioural tendencies and biases can be extremely helpful in increasing their gains and to achieve optimal investment outcomes. Normally, investors are bombarded with large amounts of information regarding the day-to-day market scenario, the happenings of certain companies and so on. This information will seek to weaken the resolve of investors in their past decisions. To tackle these biases, financial advisors generally explain the process to the investor in a step-by-step manner and suggest certain prescribed techniques to tackle future situations which might change the minds of the investors. The key word here is commitment, and this commitment can be made to grow within an investor, if he has a good relationship with his financial advisor. The benefit of a good relationship with the advisor is that there is a great deal of trust in one another, giving rise to appropriate involvement and commitment on the side of the investor.