Benefits of Having Your Own Financial Advisor

The torrent of financial advice available online is often overwhelming. Discerning the significant information from the superfluous is hard enough, and deciding how to invest your money is a further layer of complication.

Financial markets are highly dynamic—stock prices, bond yields, currency exchange rates, and political conditions are always changing. The simple fact is, it takes years of investment experience to differentiate signals from noise. Designing a portfolio that can weather a variety of market environments requires expertise.

A competent, independent advisor can ensure that each facet of your financial life is integrated into a coherent plan, consistent with your individual risk comfort level.

The Vanguard Group cites several other ways in which advisors can add considerable value for their clients:

  • Selecting cost-effective investments in a sea of options (9,000 mutual funds and 2,000 exchange-traded funds)
  • Rebalancing portfolios as markets move
  • Maximizing portfolio tax efficiency (asset location and withdrawal strategies)
  • Behavioral coaching: helping clients avoid panic selling in bear markets and investing too aggressively in mature bull markets

Vanguard has calculated that the total effects of these value-added processes are worth about 3% in net returns per year.