How does your Financial Advisor ensure the success of the performance of assets that you invest today?

Due diligence is the core of evaluation of any asset that you want to invest be it any asset classes – AIM, ETFs, Stocks, Indices, etc. Due diligence when conducted efficiently ensures the success that as an investor you want to achieve because eventually, it encompasses all areas to be assessed before any investment is made.

Usually, three types of due diligence are conducted namely, legal, finance, and business. However, when it comes to investing in the stock-specific scenario across the stock markets or indices, certain analytical techniques help to identify the best outperforming assets and how they will perform in the future.

How does an Analyst play a vital role to run you through the entire process?

Analysts have their method of selecting either Stocks, ETFs, or Indices while initiating an investment process. There are common techniques available in the jargon of books, and blogs that help you impart your analysis. However, when an analyst applies the financial analysis techniques along with ad-hoc financial modelling valuation techniques that help define what exactly a particular asset stands to gain going forward.

Do you think a novice can apply a bunch of techniques available and guide you to the best one? I would say “No” straightway. Because if you want to sail across the river, you have to be with a good sailor or else you must have experienced it frequently. Only then you can apply your instincts.

The entire perspective of “Due-diligence” prevails the following analytical frameworks like Valuation Analytics, Financial Analytics, Macro Analytics when identifying certain asset classes: –

VALUATION ANALYSIS –

FINANCIAL ANALYTICS –

MACRO ANALYTICS (TOP-DOWN APPROACH) –

It is highly recommended to apply the aforesaid techniques in line with benchmark and industry averages. However, the aforesaid framework represents a brief analytical technique and so, it must encompass further techniques when detailing the analysis.

While organizing an Initial Public Offer or executing Mergers & Acquisition exercise, the valuation comprises various elements like management background, promoters history, and all the financial, industrial and compliance-related matters are historic as well as forward-looking that ensure the success of authenticity of the outcome.

Let’s not forget that only a qualified Analyst or Financial Advisor represents factual information that entails your financial planning!!