The Value of an Advisor. As you consider a relationship with a financial advisor, you might find these excellent linked third-party articles from Vanguard and Morningstar — which attempt to put a value on the ongoing value of such a relationship — helpful. As one would expect, the value of an advisor differs with each client relationship, but this and other research shows that a benefit of 2% to 3% per year is typical. Despite a cost of 1% or so, most people do come out ahead, and that extra net 1%-2% per year compounds over time. Over 20 years, that could translate into an extra 22% to 48% in wealth, based on the starting value.
Where We Commonly Add Value for Clients. Aside from the obvious planning and investing tasks that we work with clients to achieve, we see common issues among clients where an experienced third party can have a substantial impact. One important area is movement, or progress. Many — if not most — clients reach financial planning plateaus or stuck places along the way. Keeping or selling a large position in a single stock is one example; another is finishing up estate planning work. These are but two examples of very common situations where time or knowledge may be lacking, or life’s everyday demands distract us and derail our best intentions. There’s nothing wrong; it’s just life. Yet the costs can be significant. Outdated beneficiaries, lack of insurance, untended portfolios, hidden opportunities and more can be costly and set back years or decades of effort. This is where a teamwork approach that provides accountability — in conjunction with knowledge and implementation assistance — can really move the needle. Working together, advisors can help clients identify goals and priorities, then set and achieve milestones, all while making it far easier and even enjoyable. Other “soft” benefits can include simplification, a “one source” concierge, reduced risk, freed-up time, and clearer answers, found faster. The planning process includes helping clients set clear goals in their financial lives and achieve them.
If you want to see significant progress in your own financial life, take an honest look at where you want to go, and where you are. Be kind to yourself in doing so. We’ve all made mistakes and have some regrets. Then, make a plan that includes structure that supports you in making the changes needed. Whether you need technical expertise or just support and encouragement, seek out trained professionals who will walk the path with you. It can make all the difference.
— Peter W. Johnson, Jr.