It’s such a common question: Is it worth it to have a financial advisor? It’s a big decision to make when deciding if you want to manage your own investment or have a financial advisor. Not everyone may need an advisor based on their circumstance, but many can benefit from working with a personal financial advisor. 

Are you really going to do it yourself, or are you going to put it off?

Managing your investments takes time and effort, and it’s not always easy. It’s something you have to commit to doing continuously. 

If you do have the time, it might not even be something you want to spend your free time doing! We all know the age-old saying: time is money. Well, if you’re putting off financial planning because you’re busy, then chances are you’re going to be losing money. Your to-do list is probably endless and you never quite have the time to tackle it all. If your finances are on that endless list, you might need a financial advisor. 

The value of a financial advisor is unmatched.  A good financial advisor has the ability to add about 3% of value in net portfolio returns over time. 

 

A financial advisor creates value. 

 

Effective rebalancing of investment portfolios. 

When the markets are calm, you might underestimate the importance of rebalancing. A financial advisor can provide effective rebalancing to ensure that your ride will be smoother. 

Rebalancing ensures that diversification is in place. Without it, a portfolio can potentially become overly heavy and create an overweight risk if something dropped.  

For example, if you had a balanced portfolio or 60% equities and 40% fixed income and 10 years later you hadn’t been actively rebalancing it, the risk would look a lot different. The portfolio would turn into a growth portfolio with a greater risk - 80% equities and 20& fixed income. This could be a risk that you didn’t want and cause a huge concern if the market suddenly took a turn. 

Look here. 

 

Coaching. 

Let’s talk about the year 2020. As we all know, that was a wild year. The S&P 500 Index had the largest weekly decline since 2008. 

An advisor's coaching really comes into the spotlight here. In March of 2020, the index rebounded 17.6% in the following three days and recovered. If an investor missed our on those three days, their portfolio would have taken a major hit.  

We know that markets are always going to be unpredictable. But, investors who have an advisor to guide them are likely to benefit. Financial advisors have the task of helping their clients stick to their long-term financial plan, that will help them in the future.

 

Holistic client experience. 

If you want that cookie-cutter, everything-is-the-same experience: use a robo-advisor. A robo-advisor generally just gives the investor a list of funds and provides you with an annual statement. They don’t give you on-going guidance. 

Advisors have changed in recent years. In the past, financial advisors were basically brokers - they selected investments for clients. Now, most advisors, ours included, provide holistic wealth advice for you and your family. According to Envestnet, between 2017 and 2020, there has been a 39% increase in advisors providing comprehensive planning. 

The value of a holistic experience that financial advisors give is much greater than what you would receive from a cookie-cutter plan. 

 

Goals alignment.

How am I going to get a customized experience when you have many other clients?

Financial advisors use a number of different strategies in their client’s financial plans. The strategy that works for you may not work for your neighbor. Advisors take their knowledge and relationship with you to choose strategies that align with your specific goals. 

 

Tax-smart planning & investing. 

You should consider tax management to be high on your list because taxes can have a significant impact on your returns. Research has shown that investors lost an average of 17.4% of their return in 2020 when their U.S. equity products were non-tax managed. 

A tax-managed approach to your investing can give you more money to work with and invest. Financial advisors can ensure that you’re taking the right steps when it comes to your taxes and investing. 

  

Decided that a financial advisor is right for you? Start here.

At Quraishi Law & Wealth, our goal is to provide you with the knowledge you need to make smart decisions. We’re with you every step of the way when you’re creating your specific plan. 

Want more information? Here are some more blog articles and Frequently Asked Questions about financial planning. 
 

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Carrie Russom Quraishi, JD, CAPP
Carrie provides personalized estate planning and wealth management services to clients in AR, TX & TN.
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