This article is an excerpt from the Shortform book guide to "The Intelligent Investor" by Benjamin Graham. Shortform has the world's best summaries and analyses of books you should be reading.
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What are investment counselors? What does an investment counselor do, and should you consult one?
Investment counselors are people who manage your money. Often, they’re independent firms, but can also be part of a larger bank. Investment counselors look out for your wealth over the long term.
Read more about investment counselors, what they do, and how to find one.
Investment Counselors and Bank Services
Investment counsel firms manage your money for you in exchange for fees. They can be independent firms or arms of larger banks (often called private banking or wealth management).
According to Graham, the best investment advisors tend to be conservative in their actions and promises. They want to deliver acceptable returns and preserve your principal over the long term.
They may also help you meet your financial goals in general, including managing your budget, planning for retirement, and customizing an investment approach for your goals.
The primary role of such advisors may be to protect you from yourself. In times of financial duress, they act as a stabilizer, helping you avoid unwise decisions that you might indulge in alone.
In his commentary, Zweig suggests questions to vet such an advisor:
- How do you define success? What would a good outcome with me be like in 10 years?
- What’s your investment philosophy?
- How many clients do you have? What do you do for them? How often do you talk?
- What returns are realistic for my investments?
- Have you ever received a formal complaint?
These services provide financial information to be used by customers to make their own financial decisions. They often exist as organizations that send out newsletters or provide databases of information. These services cost less than the investment advisors above.
The services vary in how opinionated they are about the information they put out, which then determines how you should approach them.
- On the most objective end, organizations produce merely statistical data on securities, which is the cornerstone for securities analysis. Examples of reputable firms from Graham’s time include Moody’s and Standard & Poor’s.
- On the more opinionated end, services may issue forecasts on the direction of the market or of individual stocks. There is a large demand from investors for oracle-like advice, and businesses will always exist to supply it. Graham has a dim view of these types of forecasts and often finds them inaccurate, technically unsound, or short-sighted.
For any financial information you receive, do your own research instead of relying solely on recommendations.
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