Quora Answer: What Would You Say to the Board if Your Financial Consultant Recommends “Guaranteed” Stocks?

The following is my answer to a Quora question: “If you are a financial controller of a company, and your financial consultant directs you to invest all the company’s savings into ‘guaranteed’ stocks, what would you do?  What would you recommend to the board?” 

Firstly, your personal funds are distinct from company funds.  Your financial consultant is meant to advise you, according to your personal needs, risk appetite, and investment horizon.  He is not there to advise your company.  If he were, he would be engaged by them. 

Secondly, it is highly doubtful that any financial consultant would direct anyone to put all their funds into a pure stock portfolio, let alone one without any form of diversification.  There is no such thing as a guaranteed stock.  There is inherent risk in the market. 

Finally, if you tell the board that you are taking the advise of your financial consultant on how to manage company funds, you are going to lose your job.  You should know what to do.  You should also be aware that you are the financial controller.  Your portfolio is primarily financial reporting, budgeting and forecasting, treasury management, and risk evaluation.  Company funds are beyond treasury management.  They will come under the purview of the investment committee or something similar, of which you are part of.  You work with the company’s money managers, and bankers.  There is no scope for any personal financial consultant to be involved, let alone know the state of the company’s funds.