In the past few years, equity markets saw good traction. This is evident by the rise in number of demat accounts. In FY19 the number of demat accounts were 3.59 crores, while in FY24 it reached 14.69 crores, translating to a compounded annual growth rate (CAGR) of 26.47%.

Source: pib.gov.in

However, higher number of demat accounts were opened post pandemic with a CAGR of 18%. People are now considering equity as a viable option for long-term wealth creation. Equity as an asset class has a potential to beat inflation despite some years of pain.

Equity markets are unpredictable as there are a lot of macro and micro factors that govern its performance. The micro factors include company’s fundamentals and financial health, management stability, governance, etc. And macro factors include economic policies, government stability, monetary policies, etc.

A lot of investors are new to investments or invest based on the friends and relatives advice. These people might have a few questions in their mind.

Let’s put an end to all these questions: You need to find yourself a trusted, proven, time-tested, equity-focused expert as your advisor. An equity advisor who can help you achieve your wealth management goals.

Beware! Due to increasing demand for equity investments (especially in the bull market), you will find a lot of equity advisors would come up glorifying their services. But which one should you pick?

In this article, we will explore things that you should look for in your equity advisor. But before we head there, let’s understand what kind of advisors you should avoid.

Equity advisors assuring guaranteed returns: This is one of the tricks that advisors use to lure you. It is a fact that no one can predict stock market and guarantee returns. Securities & Exchange Board of India (SEBI) guidelines too doesn’t allow advisors to guarantee returns. Therefore, avoid such advisors that assure you guaranteed returns of X% or lure you with statements like ‘Earn daily ? Y.’

Advisors that sale their services under the mask of big investors: This is purely a marketing gimmick. 99.9% of the times big investors having nothing to do with such advisors and even they might not know them.

Equity advisors without SEBI registration: You should reconsider equity advisors with no SEBI registration. Registering with SEBI ensures fiduciary responsibility and compliance with best advisory practices.

Equity advisors who claims to provide you with dedicated research person: Most equity advisors who claim to do so are presenting their sales people as their research person to guide you. Sales people are not qualified to provide investment advice.

Equity advisors that have not been in the business since the last two bear phases: During bull phase, a lot of new equity advisors come in the market to lure investors. However, these the ones who get washed out during a bear phase. As it is rightly quoted by Warren Buffett, “It is only when the tide goes out that you find out who’s been swimming naked.”

These fake advisors can ruin your investment journey. Hence, it is best to take decisions based on facts and not on what is shown to you. It is prudent to hire an equity advisor who can help you achieve your investment goals.

Three key attributes to look for in an equity advisor

Trust

Look out for equity advisor who can act in your best interest. Does the equity advisor understand and emphathize on how difficult it has been for you to put together capital for investment? Will the equity advisor have skin in the game? Are you able to communicate with him at least via email about your concerns? Has the equity advisor in the system for at least 10 years to have maturity and experience of riding bull or bear run? Does equity advisor have good reputation, acceptability, and brand equity in the investment community?

Ethics

Hire and equity advisor who emphasies on ethical conduct. Is your equity advisor transperant with your money? Is the equity advisor transperant about their research and findings? Do they publish papers/articles in the print? Does equity advisor frontrun the recommendations for personal gains? Is the equity advisor honestly disclosing all the performance details of the portoflio? Is equity advisor SEBI registered and they or their representatives have NISM Investement Adviser or Research Analyst certification? It is always prudent to go with the SEBI registered entity.

Performance

Look out for someone who has given more than market averages over the long-term. No advisory is 100% perfect, but it is prudent to check whether the equity advisor has been able to beat the market barometer on an average. Don’t just look for near-term performance (few months to 2 years), check their long-term track record (3 years and above).

A genuiene stock advisor can instill confidence and provide stronger growth in your portfolio. Such stock advisor will help you craft a better investment portfolio and manage timely entry and exits.