Stock Investment Services
Providers of good stocks to invest in?

The stock investment services provided by financial investment advisors and financial planners do not necessarily include direct stock investment information as their services relate more to advising on managed funds and overall financial advice.

If you are looking for the best stock to buy, a stock broker may be a better source of free stock tips - remembering of course that you will have to pay brokerage when you make a purchase.

Also, there are financial advisors offering stock investment services whose primary focus is on stock market trading. That is, buying and selling stock over short time frames.

If you are serious about value investing, you will not need the services of this type of advisor.

Some advisors charge fees as a percentage of the funds that you invest with, or through them. Depending on their magnitude, the fees can have a serious effect on the overall returns on any investment you make.

When I require financial advice, I use a fee-for-service advisor who charges on an hourly rate.

Giving someone else total control of your money was never a good idea. However, financial advisors are required by law to identify your risk profile and advise on investments that fit that profile.

You should also be able to have some control over the asset classes into which your funds are being invested.

Also, you do not want to be hit by further fees if you choose to alter the balance of the asset classes.

In relation to stock market related managed funds, you have a range of choices as to the type of fund to invest in. These choices can include in-country funds, global funds, income-generating funds, growth funds, index-hugging funds ... and so on.

A concern relating to managed funds that are invested in the stock market is that the percentage returns quoted are pre-tax returns. This hides some of the tax problems that might arise.

Some fund managers offering stock investment services have a much greater turn-over of stocks in any one year, sometimes referred to as their churn rate.

This can have a significant effect on how much tax you may have to pay. Your after-tax return may be reduced by as much as 60% for some funds with a large 'churn' rate if you are on the top marginal tax rate.

So a fund manager who makes a noise about having a (pre-tax) return of 20% may in fact give you an after-tax return of 8%, which is quite a different story.

Hence, you need to investigate the policy of the fund manager of the fund that an advisor may be suggesting you invest in. I look for funds that have a value-investing approach with longer investment time frames, and hence less 'churn'.

If the fund also focuses on shares with franked dividends, then all the better, as this will also help to offset tax liabilities.

In summary, the moral of the story when using the stock investment services offered by financial advisors and fund managers is to obtain some knowledge of the investments that are being offered to you and be aware of the effect of fees and taxes on your overall post-tax returns.

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