Why do financial advisors not advise on which specific shares to buy?

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trajan

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I sought an opinion lately on a plc trading internationally and which had enjoyed vigorous growth in both revenue, orders and its share price over the last 12 months.
All I got was something like:

... Company X is a well-managed enterprise with capitalization Y and share price Z, up from Z0 12 months ago representing a gain of ~ 84%.
... It is important to realize that share prices may go up and down and this statement is by no means a recommendation to buy, hold or sell shares in the foregoing business.

Is this the way with them always ?
I mean, old Pramit Ghose in the Sunday paper produced better analysis than this. He always sought to rationalise causes for growth or decline in share price and always made a clear recommendation.

Do you have to be a stockbroker to make a definite buy/sell/hold recommendation ?
Straight answers only please.
 
I presume it is drafted within the boundaries of whatever is legally allowed, either the market abuse directive or market abuse regulation.
 
You're asking the wrong people. A financial advisor isn't qualified to tell you if a certain stock is a good buy of not. Pramit Ghose is.

I know whenever clients ask me if they should buy a certain stock or not, I tell them I am not qualified to say whether they are buying it at the right price, what the future projections are or whether there is anything coming down the road that needs to be looked out for.

And I am not aware of any financial advisors who are qualified to give that advice either.

Steven
Financial Advisor
www.bluewaterfp.ie
 
@Steven Barrett:

Hold on now.

If Batt O'Connell has his regular 6-monthly with you and lately had a windfall of €200,000 - you're saying that beyond advising him to top-up a pension, pay off outstanding mortgage, home improvement or car loans, etc you will not advise him on any further application of his spare cash ?
 
trajan said:
@Steven Barrett:

Hold on now.

If Batt O'Connell has his regular 6-monthly with you and lately had a windfall of €200,000 - you're saying that beyond advising him to top-up a pension, pay off outstanding mortgage, home improvement or car loans, etc you will not advise him on any further application of his spare cash ?
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No, I will not advise anyone on what individual shares to purchase. You should talk to someone who is a CFA or a member of the CISI to get advice on individual stocks.

People should know their limits. And financial advisors are not qualified to advise on individual stocks. If they pick winners for you, it is more likely due to nothing more than luck or you happened to be investing in a bull market anyway.


Steven
www.bluewaterfp.ie
 
But you have no issue advising on merits of one or other pension, education fund, government bond, special savings account, etc ?
 
trajan said:
But you have no issue advising on merits of one or other pension, education fund, government bond, special savings account, etc ?
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No, I advise on products and funds but am not qualified to advise on the stocks that make up those funds. I leave that to those who are.
 
trajan said:
@Steven Barrett:

Hold on now.

If Batt O'Connell has his regular 6-monthly with you and lately had a windfall of €200,000 - you're saying that beyond advising him to top-up a pension, pay off outstanding mortgage, home improvement or car loans, etc you will not advise him on any further application of his spare cash ?
Click to expand...

Provide free advice on regulated investments to people who won’t pay and are likely to be first in the queue to sue/give-out if it all goes pear-shaped?

Where do I sign up for that?

Advising on shares is heavily regulated; the client has to be risk profiled, given costs and charges disclosures pre-trade, and the investment needs to be deemed suitable.

For an ‘execution only’ transaction, no advice can be given at all.
 
Steven Barrett said:
No, I advise on products and funds but am not qualified to advise on the stocks that make up those funds. I leave that to those who are.
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So at that rate, if Batt had a notion to buy some Vanguard index-fund units - you might advise.
But if Batt wanted in to Google shares, you'd pass ?
 
trajan said:
So at that rate, if Batt had a notion to buy some Vanguard index-fund units - you might advise.
But if Batt wanted in to Google shares, you'd pass ?
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A financial advisor, any financial advisor is neither qualified nor experienced in advising on individual stock selection. No matter how many different ways you ask the question, that answer is always going to be the same.

Now the people who do this kind of work are either very good at it and don't need to do advisory work, charge a lot of money for doing it or are not very good, but happy to take your cash.

Now I have no idea of what the going rate is in Ireland, but here in Switzerland the private banks usually charge between 100k and say 250k for such a service and that is regardless of how the advice pans out.
 
trajan said:
I mean, old Pramit Ghose in the Sunday paper produced better analysis than this. He always sought to rationalise causes for growth or decline in share price and always made a clear recommendation.
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Pramit Ghose has been a fund manager for 35 years. That's his job. He's not a financial advisor.
 
I covered this exact point recently.
I used to teach the investment and capital markets course in Dublin Business School so at one time I used to know a reasonable amount about this stuff

“Private investors should not invest in individual companies” is the advice everyone should be given because the alternative, index investing, is empirically superior unless you are lucky, and relying on luck is not a good investment strategy.


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