The True Value of a Financial Advisor
When it comes to investing, it’s natural to wonder if your financial advisor is worth the cost. After all, if your returns are only 4% and you’re paying 1% in fees, that’s a significant chunk of your hard-earned money. But is that really the best way to measure your advisor’s value?
Looking Beyond Investment Returns
A good financial advisor does more than just manage your investments. They take the time to understand your goals, values, and risk tolerance, and help you create a personalized plan to achieve your objectives. They’ll guide you on how much to save, which accounts to contribute to, and how to maximize tax efficiency. They’ll also ensure you have the right insurance in place, coordinate with an attorney to create an estate plan, and provide guidance on major life decisions like buying a house or funding your child’s education.
The Real Benefits of a Financial Advisor
Research from Vanguard shows that a good financial advisor can increase your net returns by up to 3% per year over the long term. But this value isn’t just about beating the market; it’s about providing behavioral coaching, helping you stay disciplined through market ups and downs. This consistency will pay off in the long run, even if you don’t see it in your yearly returns.
Evaluating Your Financial Advisor
So, how do you know if your financial advisor is providing value? Ask yourself:
- Do they listen to your concerns and goals?
- Do their recommendations align with your values?
- Do you understand your financial plan and how it’s helping you reach your goals?
- Are they responsive and helpful when you have questions?
- Are they proactive in helping you plan for the future?
What to Do Next
Remember, short-term returns aren’t the only measure of your financial advisor’s value. They’re doing a lot more behind the scenes to help you achieve your goals. If you have questions or concerns, don’t hesitate to discuss them with your advisor. And if you’re looking for a new advisor, consider using a free tool to match with up to three fiduciary financial advisors who can help you achieve your financial goals.
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