Factors Affecting the Investment Advisor Performance:A Study in the Colombo Stock Exchange

Abstract

The brokerage firms are only allowed party to buy and sell shares on behalf of investors in the stock exchange. Their success is unswervingly depends on the performance of the investment advisors employed, the key people who advice and persuade the investor and take their orders. With the objective of finding as to what constitute human capabilities of successful investment advisors at work, this study employs the survey method and gathered information over a sample of 61 investment advisors across 5 brokering firms of Colombo Stock Exchange on three categories of personal information namely knowledge, social background and personal traits through a well structured questionnaire. First, the levels of associations between some of the main characteristics and performance have been measured through correlations. Next, the total sample of investment advisors has been bifurcated as high and low performing
groups and then their personal characteristics have been compared statistically. Our results shows that the success as an investment advisor is mainly determined by the social background of the investment advisor which includes factors such as parental social class, school attended, close relatives’ involvements in security investments and their success. Although, it is found that the level of formal education is not a key factor that determines the success of investment advisors, the experience, exposure
to the industry and the special knowledge on investment management acquired through training programmes are important considerations of the success. Personal traits of investment advisors demonstrated a kind of mixed results.