September 22, 2006

How do you diversify for the investment advisor’s risk?

Sir, in “For many rich people, wealth is a consequence of being succesful, Peter Scholla, himself an investment advisor, tells us that “the rich through the hiring of independent advisers with broad ranging responsibilities and powers. . . end up employing a variety of firms” meaning private banks. This sounds like a good suggestion for a diversification technique although the follow-up questions would of course then be, how many independent advisors do you need to hire to diversify yourself out of the investment advisor’s risk?