Doing this will give you an edge over most investors

Robin Powell
Feb 24
4 min read

If you're looking for an edge as an investor, you're not alone. Many people spend their time chasing the latest stock tip or trying to time the market.

But what really sets successful investors apart is not secret information or complicated strategies. It is the ability to manage their own behaviour, especially in times of uncertainty.

Your investment choices do matter. But the decisions you make about when to act, when to stay patient, and how to respond to market movements are often more important.

KEY TAKEAWAYS

1. Investment returns depend on behaviour

CARL RICHARDS explains that people often confuse investment performance with investor performance. If you buy and hold a fund for ten years, you get its return. But if you jump in and out, your results will likely be worse.

The problem is not the investment itself. The problem is how we behave when we own it.

2. Knowing what to do is not enough

We are hard-wired to make poor decisions at the wrong time. We want to buy when others are making money, and we panic when markets fall. Richards says this is where a financial adviser can make a real difference.

Advisers do more than offer technical advice. They help keep you from acting on emotion and remind you of your long-term goals.

3. Guidance matters in difficult times

Behaviour is easy to manage when markets are calm. The real test comes during a crisis. Richards points out that we all have blind spots, and we cannot spot our own.

A good adviser helps you stay focused. They remind you of what matters, especially when you're tempted to make a mistake that could hurt your long-term results.

FIND AN ADVISER

Investors are far more likely to achieve their goals if they use a financial adviser. But really good advisers with an evidence-based investment philosophy are sadly in the minority.

If you would like us to put you in touch with one in your area, just click here and send us your email address, and we'll see if we can help.

TRANSCRIPT

Robin Powell: Some investors are always looking for an edge. They seek out information on the best stocks, sectors or funds to invest in.

But they tend to overlook the most important advantage of all and that’s controlling their own behaviour.

Carl Richards: There's this hyper focus on performance. And it's always performance of investments. Right. When you open the newspaper or you see it on the finance or pornography network on the TV, they always talk about the performance of investments. And what we don't realize is there's a big difference between an investment and an investor, right? If you buy an investment for ten years and hold it for the whole time period and don't add or take any money away, you get that investment performance, right?

But nobody does that. That's the dilemma, right? Of course we want the best investment we can find, of course, but the challenge is even when we own the best investment, our behaviour gets in the way.

RP: The problem is that we’re hard-wired to do the wrong thing at the wrong time.

So, for example, we pile into a stock, or cryptocurrency, when we see others making money, and we take fright when markets fall.

For Carl Richards, that’s the most important reason for hiring a financial adviser.

CR: Managing investor behaviour is really it's one of these crazy, sort of maddening things that it seems so simple, right? But not to be confused with the easy. And the reason it's not that we don't know. Like this.

There's so many other areas of our lives that this is true. Like knowing is easy, doing is often hard. Like we can point it at health, we can certainly point at diet, right?

Like we all know what we should do. Doing it is quite hard. And so you don't hire a financial advisor because you don't know what to do, right? I mean, some people do like some of us like that even don't even want to know. Right? But most people don't hire a financial advisor because they don't know what to do.

They don't hire if they certainly don't hire a financial advisor because they're dumb, right? They hire you. Hire a financial advisor to be the thing between you and poor behaviour.

RP: Managing our behaviour seems easy when markets have been going up.

It’s only when we’re in the eye of the storm that we’re reminded just how hard it can be.

CR: We all have blind spots. And this is the crazy, the most profound thing you'll hear all day is you can't see your own, right? Like, by definition, you can't see your own. So a financial advisor.

Just a good one. A real one, right? A real one is just there to help remind you of. First clarify where you want to go, and then remind you of what you said when you're thinking of doing something silly.

And investment behaviours, particularly one of those things, because it feels we're hardwired to do things that are on our own, that are against our own self-interest. And a good financial advisor can say, hey, let's just back up and remember and, and help sort of walk you in off the ledge when you feel like jumping.

RP: So, if you want an edge over the majority of investors, stop scouring the media for the latest stock tips.

Focus instead on your own emotions and behavioural biases. Keeping those in check will give you a huge advantage.