The Value of a Financial Advisor
Sarah sat across from me, clutching her coffee mug tightly. “If only I had talked to you a few years ago,” she sighed, “before I sold everything during the market crash.” Her story isn’t unique.
Like many successful professionals, Sarah thought managing her own investments was the smart, cost-effective choice. After all, why pay for advice when information is freely available online?
But here’s what most people don’t realize: the true value of a financial advisor goes far beyond picking investments. Let me show you what I mean…
The Hidden Cost of Doing It Alone
Remember March 2020? The market was in freefall, and headlines screamed about the next Great Depression. Sarah, like many others, couldn’t take the anxiety anymore. She sold everything, planning to “wait it out.”
We now know what happened next: the market staged one of the fastest recoveries in history. By the time Sarah felt confident enough to reinvest, she had missed out on the recovery and substantial gains.
We sit with thousands of people every single year and run into folks who say proudly “I got out of the market right before it tanked in 2008.” Our next question is “when did you get back in” and they look at us stumped. Most of them are still sitting in cash today. They timed the market once, but missed out on substantial gains over-time by not remaining in the market.
This is where the first, and perhaps most valuable, role of a financial advisor comes in: behavioral coaching. A financial advisor understands the market and its history, they are able to make decisions in your best interest when things turn sour.
The Power of Having Someone in Your Corner
Studies by Russell Investments found that behavioral coaching alone can add 2.82% to your annual returns.
But what does this really mean? Imagine having someone who:
- Calls you during market turmoil to remind you of your long-term plan.
- Helps you tune out the noise of “hot stock tips” from well-meaning friends.
- Keeps you focused on your goals when emotions threaten to derail your progress
As one client told me recently, “You’re like my financial conscience – keeping me from making decisions I’ll regret later.”
Beyond the Emotional Support: Your Financial Architecture
Let me tell you about Mike, a firefighter I work with. At 45, he was planning to retire in five years – much earlier than the typical retirement age.
Like many first responders, he had access to a pension and a special retirement account called a 457(b). “I thought I had it all figured out,” he told me. “Then you showed me how to create a bridge for early retirement and when I could access my other retirement accounts. “That changed everything.”
This is especially important for municipal workers where they have both a Roth and traditional 457(b) available. 457(b) plans were created with municipal workers’ best interest in mind.
This allows them to take withdrawals as soon as they separate from service, with no penalty. In contrast to the private-sector 401(k), where you have to wait until 59.5 until a penalty free withdrawal.
Technical Expertise: Strategic Account Management
Picture your retirement savings as a puzzle. Each account type – 401(k), IRA, Roth, HSA, 457(b) – is a unique piece with its own rules and advantages. Your advisor helps you:
- Place each investment in its optimal account for tax efficiency.
- Create a strategic withdrawal plan that minimizes taxes and penalties.
- Creates a financial plan that optimizes early retirement
Think of your investment portfolio like a garden. Without regular attention, it can become overgrown in some areas and undernourished in others.
Your advisor:
- Keeps your risk level aligned with your goals.
- Ensures no single investment grows to dominate your portfolio.
- Takes advantage of market movements to rebalance efficiently
A Real Partner in Your Journey
Remember Sarah from the beginning of our story? She now has a different perspective on the value of professional advice. “It’s not just about the investments,” she says. “It’s about having a trusted partner who understands my goals and helps me make better decisions.”
That’s what a fee-based advisor relationship is all about – creating a partnership where both parties are focused on the same goal: your financial success.
Studies from Russell Investments found that a financial advisor can add 5% net return annually by behavioral coaching, tax optimization, asset allocation, and financial planning.
Questions to Ask Yourself:
In the last year, have you ever:
- Worried about whether you’re on track for retirement?
- Wondered if you’re making the right investment decisions?
- Felt overwhelmed by financial choices?
- Wished you had someone to bounce ideas off of?
If you answered yes to any of these questions, consider this: The biggest cost of not having a financial advisor isn’t the potential investment returns you might miss – it’s the peace of mind and confidence you never get to experience.
The Next Step
Every day I meet people who wish they had started working with a financial advisor sooner.
The good news?
It’s never too late to start making better financial decisions. Whether you’re just starting your career or nearing retirement, having a professional in your corner can make all the difference.
After all, your financial future is too important to leave to chance. Let’s talk about how we can achieve your financial future, together.