3 Reasons You’ll Love Financial Advising
Those people who work with a financial advisor rarely go back to investing without one. Sure, you may switch advisors over the years to find the right person for your level of risk, frequency of communication, or need for guidance—but rarely do people ditch the advisor role in their investing all together. The value of having an advisor is more than just return on investment. Here are three intangible benefits to working with a financial advisor:
There are certain people whose motivation comes from the self—but for most of us, we need external motivation. Goals like eating healthier, reducing screen time or successfully sticking to a budget are much more achievable when someone holds us accountable.
The American Society of Training and Development (ASTD) did a study on accountability and found that we have a 65% chance of completing a goal if we answer to someone. And regular, specific meetings with that person will increase our chance of success by up to 95%. Financial plan reviews with your advisor are the perfect example of this. In our recent member survey, we found that over 70% of members who work with a financial advisor also have a documented financial plan—versus only 15% for those who don’t have an advisor. This is accountability in action.
If stocks and investments consistently increased in value, a financial advisor’s value would be reduced. People would simply invest in whatever and forget it. But as we know, investments do not consistently increase in value. The stock market can be volatile and sometimes for extended periods, which is one of the reasons working with an advisor can be to your benefit.
An advisor manages your investments according to your financial plan. They are trained make informed, logical decisions when the market is not performing the way we hoped. The average self-investor commonly falls into the trap of making decisions largely based on emotion, instead of on the logic built into their financial plan. When everyone seems to be cashing out, your advisor can keep you in the game and on a plan.
There is only so much time in a day, and managing your investments and financial plan is no exception. It takes a lot of time to truly stay on top of it and do it successfully. Sure you may be able to squeeze it in here and there but are you truly maximizing your retirement with your part-time attention to the details? Probably not.
Even if you have the experience, knowledge, accountability and neutrality of a professional financial advisor, the critical advantage they have over you is time. Understanding the micro and macro economies, staying up on the latest tax reform as it relates to your long-term investments, understanding the newest financial products and where they are appropriate, and a full list of other nuances for the market is a full-time job. And since it isn’t yours, wouldn’t it be nice to have someone on your side whose full-time job it is?
There is a reason that people who work with a financial advisor accumulate 290% more assets after 15 years and it all starts with accountability, neutrality and time.
For specific tax advice, please consult a qualified tax professional.