1. New retail investors rush into the market

The current stock market rally began on September 24th, when the State Council Information Office held a press conference announcing significant policies such as reserve requirement ratio cuts, interest rate reductions, and reductions in existing mortgage loans, which directly swept away the previously gloomy market sentiment.

Unlike previous bull markets, the rise of internet platforms like TikTok has made the spread of information much faster than before. For retail investors with no investment experience, the inflammatory nature of influencers on these platforms is extremely strong. Without understanding the situation, these retail investors naively believe that stock trading equals making money.

Under the fervent market sentiment, retail investors who didn't even have a stock account could no longer resist the temptation of the stock market and began to rush in. The market instantly shifted from pessimism to optimism. Although there are no exact account opening data available at present, feedback from various securities firms indicates that they were working overtime during the National Day holiday, with a significant increase in the number of new accounts opened. Looking at the margin balance, as of October 8th, the combined margin balance of the Shanghai and Shenzhen stock markets was 1536.548 billion yuan, an increase of 107.047 billion yuan from the previous trading day.

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Crowds surged, and funds flowed into the stock market like water.

However, the market is fickle. After the new retail investors rushed in, the market index回调ed from 3500 points to 3200 points in just three trading days. The retail investors' dreams of getting rich quickly not only failed to materialize but also resulted in significant losses.

2. Most people lose money because of bull markets, not bear markets

According to the paper "Wealth Redistribution in Bubbles and Crashes," co-published by several scholars from Tsinghua University, University of International Business and Economics, London School of Economics, and the Shanghai Stock Exchange, during the period from 2014 to 2015 when the Chinese stock market experienced a bubble that soared and eventually burst, a difference in experience and skills led to a transfer of 250 billion yuan in wealth from the lowest-income group to the highest-income group, with the former accounting for 84.9% and the latter 0.5%. In other words, bull markets make the rich richer, but for ordinary people, they are likely to miss out on the feast of the bull market.

Compared to the caution during bear markets, investors are usually fearless during bull markets. Especially retail investors, whose excited emotions overcome rational judgment. At this time, they are full of confidence, turning a blind eye to risks, and even continuously increasing their positions and leverage. Little do they know that when everyone feels there is no risk, it is often when the risk is the greatest. As the market continues to rise, it also pushes the risk-reward ratio to an extremely unreasonable position. Market turning points can appear at any time, and retail investors who are fully invested and leveraged will ultimately be left with heartbreak.

3. Bull markets require buy-side investment advisors more, but buy-side investment advisors are not suitable for everyone

[Note: The original text ends abruptly, and the translation stops where the original text ends.]During a bull market, investors face dual challenges. On one hand, market volatility is significantly amplified, and retail investors, due to their lack of professional investment capabilities, often struggle to discern the underlying logic. On the other hand, the market sentiment during a bull market is highly elevated, and investors are prone to fall into "herd mentality," with the herd effect becoming apparent, leading to investment behaviors deviating from rationality.

Therefore, in a bull market, it is even more necessary to have buy-side investment advisors to compensate for the cognitive gap in professionalism and to overcome emotional fluctuations, helping investors achieve their wealth management goals.

However, truly effective investment advisory services come with a threshold. Clients need to recognize the complexity and risks of investment, thereby delegating trading rights. In this way, clients and buy-side investment advisors can work together towards a common goal.

Regrettably, in reality, those who need investment advisory services the most and those who cannot understand the value of investment advisors are often the same group of people. A large number of clients continue to enjoy the thrill of short-term speculation. Especially at the current juncture, the voice of "rational entry into the market" seems insignificant when faced with the traffic of "getting rich quickly in the stock market."

Many investment advisors feel quite helpless. In a bear market, by asset allocation, continuous companionship, and reassuring clients, investment advisors have managed to make everyone understand the significance of long-term adherence and achieve the goal of minimizing losses. However, in a bull market, the concept of long-term investment is again disrupted by short-term fervor, and the real test seems to have just begun.

I suggest maintaining patience and not forcing things. The success of any business model requires time to settle, and being a bit slower is not necessarily a bad thing. Perhaps after this bull market, more retail investors who have "learned from their mistakes" will realize the value of investment advisors.

In fact, not every client is suitable for investment advisory services, nor is every front-line staff member with product sales experience suitable for transitioning into an investment advisor role. Therefore, for clients, before purchasing investment advisory services, it is necessary to understand what investment advisors are and whether they are truly suitable for themselves. For investment advisory service providers, it is even more important to think clearly about whether they have sufficient cognition, resources, and determination to do this.

4. The Three Soul-Searching Questions for Buy-Side Investment Advisors

Ultimately, buy-side investment advisors need to answer three questions: Who are they serving? Who is serving them? And what are they serving?

Who are they serving? Buy-side investment advisors serve individuals who recognize the concept of long-term investment and need professional wealth planning; they are definitely not serving those who chase gains and cuts, pursuing short-term profits in a speculative manner.Who provides the service? A buy-side investment advisor is a professional who can deeply explore and understand client needs, comprehend asset allocation; they are certainly not product salespeople.

What is the service about? Buy-side investment advisors focus on clients' life planning, using wealth management services to help clients achieve their life goals; it is certainly not about satisfying short-term greed needs or simply pursuing higher and higher returns.

Many people in the market now claim to be investment advisors. However, different institutions and practitioners have different understandings of the meaning of "investment advisor." Some "investment advisors" are still competing in sales volume and portfolio performance, with no real change in the client service model, still fundamentally centered around product sales.

A true buy-side investment advisor represents a client-centric wealth management model. It aims to provide professional investment advisory services starting from the client's needs. They earn service fees, not sales commissions, aligning completely with the client's interests.

Helping clients manage money is a highly responsible task. This is because the significance behind money is to support the realization of life goals. This means that an investment advisor is not just a financial planner for the client but also a long-term partner in their life.

An excellent buy-side investment advisor needs to understand not only the client's financial situation and risk preferences but also delve deeper into the client's life planning and underlying values, helping the client to uncover their most core needs. Based on this, they then match the corresponding asset portfolio. In this way, the client can focus on their main business, concentrate on what is most important to them, and entrust wealth management to more professional advisors.

Such deep trust and long-term companionship are precious and rare. This also dooms buy-side investment advisors to not be a business of explosive growth or quick money but one that requires long-term cultivation and commitment, as well as sincere passion and dedication from practitioners. This difficult but correct endeavor is destined not to be smooth sailing. The client's trust is both a threshold and a barrier. Once the threshold is crossed, it becomes a barrier; if the barrier cannot be broken, it remains a threshold.