Typically, I write about issues facing advisors and related ideas and strategies. There will be plenty of that here, but the focus of this piece will be on why clients should consider working with advisors if they are not already doing so.
Of course, advisors are well aware of their value and the reasons why clients should work with them, so the value in this piece (I hope) is that it can serve as a small part of advisors’ strategies in terms of articulating their value propositions to prospective clients.
For the clients and those thinking about hiring an advisor reading this, you may already feel that personal finances and the related planning are daunting endeavors. Even if you’re highly organized and enjoy investing and consuming related content, there are myriad challenges to deal with. Those include everything from saving for a home and college funds for kids to estate and retirement planning, tax considerations and more.
Said another way, many folks may be fooling themselves into thinking they don’t need an advisor when in reality they do and could derive significant benefit from such a relationship.
If the Affluent Are Doing It…
Obviously, there are financial differences between the affluent and those that are not. Those in the latter group may want to consider the willingness of the former to work with financial professionals.
“Many investors turn to professionals for guidance on their investments. Nearly six in 10 (57%) of high-net-worth investors in the U.S. currently work with a financial professional,” according to a Morgan Stanley survey. “These investors are most interested in getting guidance on retirement income (87%), asset allocation (87%), market analysis (87%) and changes in tax policy (80%).1 Many also want a Financial Advisor’s help aligning their portfolio with their values (75%), sticking with their financial plan (73%), planning for long-term care (73%) and estate planning (68%).”
Will working with an advisors make you rich? No, absolutely not and any advisor that makes such an audacious claim should be avoided like the plague. Still, there’s value in mimicking some of the financial habits of those in higher tax brackets.
Another reason to consider working with an advisor is having someone to talk to before making impulse decisions. Advisors aren’t psychologists or therapists, but they are integral in the decision-making process. Remember: Sometimes the best bets are the ones that are avoided or the instances in which temporary mistakes don’t turn permanent.
“Financial advice can also help you avoid making sudden decisions based on bad timing. Many people have a tendency to pull money out of the stock market when prices are falling, and to buy into the market when prices are rising,” adds Morgan Stanley. “This can cause investors to overpay for stocks or miss out on buying opportunities in the market.”
Other Benefits of Working with Advisors
There are other potential perks in working with advisors, plenty of which would-be clients may not be thinking of at the moment. For example, many advisors can offer clients access to alternative and non-traditional asset classes that clients can’t access on their own.
And while the universe of free or low-cost financial data and reports is vast and increasingly strong in terms of quality, the fact is advisors have access to data, research and the like that ordinary investors can’t get on their own. Those are just a couple of the examples of benefits accrued while working with financial pros.
“You can meet regularly with your Financial Advisor to talk about important life changes, review your portfolio, discuss evolving goals and priorities, and address complex needs such as estate planning and liquidity events,” concludes Morgan Stanley. “Best of all, working with your Financial Advisor enables you to have someone who understands your goals, while looking out for your financial future.”
Related: Why Advisors Should Focus On Women: Smaller Debt Burdens