Quora Answer: How Do I Find a Financial Advisor Who Outperforms the Market?

The following is my answer to a Quora question: “How do I find a financial advisor that outperforms the market?”

You should not look for a financial advisor who outperforms the market since financial advisors are not traders.  A financial advisor sets up your portfolio, mitigates your risk, and diversifies your assets so that they earn over an extended investment horizon.

A trader is focused on a specific fund, or group of stocks, debt instruments and derivatives; and seeks to maximise returns by active management of them for short-term gains.  A financial advisor who tries to be a trader might not be a good financial advisor since the focus is entirely different, and this applies equally to a trader attempting to be a financial advisor.  They are apples and oranges.

With regards the financial advisor, the goal is not outperforming any market, but to increase the overall value of your investments.  Since these instruments are diversified, there is no specific market to outperform.  The main barometer is return on investment, how much you put in versus how much your holdings are worth at specific intervals significant to the client, such as retirement.