When you get advice from somebody you are hardly in a position to tell whether it is in YOUR interest, right?

Well, here are some tips! When you go to any professional these days they make their advice sound very ‘professional’ sounding.

So what are the signals that you should look for?

1. You go to a dentist with a Rs. 750 budget and he gives you a Rs. 84,000 solution: Sure it is the Merc that he is suggesting, and your whole body is screaming against it, listen to your GUT. Say No. Maybe you need a simple solution, look for one. Looking for 30 year solutions makes no sense when you are 50 years old or for worse looking for 30 year solutions when you 84 years of age. The wood that burns you is not likely to appreciate the quality of the dentistry, right? LISTEN TO YOUR GUT.

2. The advice is from somebody who is NOT bothered about YOUR GOALS: If you get a running coach who is interested in making you run faster, and harder may not be the right coach for you. Face it, if you are an amateur runner and run for fun and your coach wants to showcase you as a ‘show off’ or ‘beta’ client – your goals do not match. Do not listen to him and injure yourself. This is poor advice!

3. The advice is not aligned with your life goals or ultimate vision: If you are a CA and have also done your MBA in finance, maybe you wish to be in equity research. It is possible that you get a sales job and your boss is advising you to do aggressive wrong sales, it is poor advice. This is largely taking a short term view and looking for short term success whereas your long term goals are not in tandem with what you are doing. Avoid such jobs. If you can afford it work for a lesser salary in a job that co-ordinates better with your long term vision!

4. The adviser is wrongly qualified: He is a friend who has experience, but is not qualified. I have seen Electronic engineers, Marine Engineers, CAs, doctors, handling their equity portfolios. Many of them have done a fantastic job of managing their portfolios. However it does not qualify them to give you advice simply because they may not know asset allocation, may not understand risk covers, may have been lucky with a few deals. Be careful – education helps while giving advice – empirical evidence is not enough. Good track record is fine, but not adequate.

Again there is another risk in GOOD TRACK RECORD which the adviser claims – he may or may not be telling you ALL HIS STORIES. If an adviser got WIPRO right as an investment in 1980 and was still sitting on a few of those shares and have a NET WORTH OF Rs. 300+ crores WITHOUT getting anything else right in his life. So if his track record is NOT in the public domain, well, to me, professionally speaking, HE DOES NOT HAVE A TRACK RECORD. Simple.

5. Your body feels wrong: When you feel somebody has a conflict of interest – a doc selling a particular action, an agent selling a particular product, …..scream and run away from the place. When you know that there is a conflict of interest, run away from there!