The Value of REAL Financial Advice

As investors, it’s easy to focus on trying to find the best investment, find the lowest fee fund, or how well your portfolio did compare to the S&P 500. It’s easy because you can “feel” those things. While these are easy to focus on, a growing body of research shows that the focus should actually be on other things, things that are intangible.

Vanguard has published a lot of research around financial advice and specially around what the value of a good financial advisor can add to an investor’s financial life.  They conclude that effective advisors may add about 3 percentage points of value in net portfolio returns over time. The biggest potential value-add of an advisor, in Vanguard’s perspective, comes in the form of behavioral coaching.  This type of advice is not “what’s going to do the best over the next 3 months” but instead trying to help investors fight their own biases and think about more than just their investments.

To put a little more context behind how we believe, and have seen, our advice can have a positive impact, beyond potentially increasing investment returns, let me share three areas we focus on: freeing up time; bringing clarity to your financial goals and life; and keeping your focus on what you can control (savings, taxes, …) and not what you can’t (market performance).

Time:  A great advisor can help alleviate you from the day-to-day burden of managing your finances, freeing up previous time and energy for other, more personally-fulfilling pursuits.

Clarity: A great advisor has the potential to bring clarity to your financial lives by helping you to establish realistic and achievable personal financial goals by helping you answer questions like:

• How much will I need to achieve each of my financial goals?
• Am I on track to reach my goals?

Focus: A great advisor can give you the best chance for achieving your goals by providing much needed focus and guidance regarding what more you can do to:

• Save more and do so efficiently
• Minimize or limit the destructive impact of taxes and the cost of investing
• Ensure your family is taken care of should something happen to you
• More effectively structure your estate

While these intangible things are harder to focus on, we believe, and the evidence shows, this type of advice and having an advisor that focuses on it, is more important and impactful on your long-term financial well-being. 

If you’d like to hear more and learn how we work, we’d love to connect.  Contact us today for an introductory meeting.