The Value of an Advisor

Here’s a little story for you about the value you get from working with a financial advisor – although I’m preaching to the choir, I’m sure!

Imagine you’re sitting out on a shady deck, sipping a glass of wine and chatting with a few good friends. Talk turns to money matters, and one of your friends mentions he’s not sure he’ll ever be able to retire. His wife chimes in that they still have that second mortgage, and then what about paying for kids’ college, and soon other friends add their two cents, commiserating with their shared uncertainty about their financial futures and the confusion of investing.

You quietly sip your wine and smile, because while you empathize with your friends, you feel confident in your own financial situation. You’ve hired a financial advisor you trust, and you don’t worry about your financial future anymore. Your friends notice your smile and insist on hearing your reasons for feeling so sanguine. You tell them:

My advisor helps keeps track of my financial affairs.

Before I hired my advisor, I didn’t know where all my money was or how to achieve my financial goals, or even what my goals should be. My advisor helped me consolidate all my accounts so I know where everything is; lay out specific goals with concrete, manageable steps that I’m working towards with every paycheck; and make deliberate saving and investment choices that support my goals. We talk about how to pay for our kids’ college educations; planning for retirement and saving into my retirement plans; and what my income will look like when I do retire, including making the right choice about our Social Security options. If I ever have any doubts or questions, she’s only a phone call away.

The problem for most of us is that there is no voice in our environment advising us to “pay” ourselves a fair percentage of the income we earn by saving. Instead, we’re bombarded by messages that make powerful arguments to do the opposite: Buy this, that, or the other thing. The entire advertising community conspires to take those dollars out of our hands before they ever hit an investment account. My advisor is a rare voice speaking out in favor of what is best for me.

She also helped us protect our future by making recommendations about our estate plan and evaluating our insurance coverage. Her input let us rest easier knowing that should the worst happen, we’re still going to be financially secure.

My advisor helps me make good decisions.

When the market tanked in 2008 and all my friends were panicking and selling, they were all reacting to their emotional anxiety about losing money. As a result, they sold off at the worst possible time. They trusted their feelings and acted emotionally because it’s easier to take some action, any action, than to sit tight. But my advisor helped me hold on, not selling at the bottom, but waiting – and I’m glad she did! My net worth has steadily grown over the last six years, thanks to that discipline.

Incidentally, independent research supports this observation – individual investors really don’t do as well on their own as with an advisor.

Working with my advisor, we found a portfolio that suited our risk tolerance and moved us towards our goals, and then she helped us stick with it. She provided accountability and discipline to think rationally when we were reacting emotionally. My independent advisor provides a dose of objectivity right when I need it.

My advisor monitors and manages my investments so I don’t have to.

After my advisor understood my risk tolerance, she invested our money in a diversified portfolio that will ride out the market’s ups and downs. She monitors the markets and our portfolio, and rebalances our investments when it’s appropriate. I don’t even think about our investments most of the time, because I know my advisor is thinking about them for me. Our advisor also takes tax considerations in account, trying to reduce our tax burden and adjusting her recommendations based on our income and tax bracket each year.

My advisor works for me.

She’s a fiduciary, which means she always puts my best interest first. Since I pay her a percentage, I know her only loyalty is to me. She doesn’t get commission for investing my money in certain funds; instead, she selects investments that meet my needs, looking for low-cost investments that put more money in my pocket rather than in Wall Street’s pocket. Her only goal is to help me achieve my goals.

On top of all that, my advisor can provide specialized, expert advice when the need arises.

My advisor also provides retirement planning and income projections; advises on charitable planning, special situations like creating special needs trusts for a disabled child, and business planning; and helps manage risk by evaluating and selling life, disability, and long-term care insurance. Of course, that doesn’t even mention the comfortable knowledge that I can call an expert for advice on virtually any financial subject, and I’ll get an answer that is not tainted by a sales agenda.

After you finish your soliloquy and they recover from the glaze-eyed shock of hearing you talk so long, your friends agree that maybe they should look into hiring an advisor, too. They envy your confidence and peace of mind, and would like to find out more.

The point is that we at Kaizen Financial Advisors, LLC offer services that are an enormous value to people who are motivated to enjoy successful, prosperous lives. Our only goal is your success and prosperity, which, sadly, is unusual in our financial world. If you’d like to refer some of your friends, family members, or acquaintances to us, please don’t hesitate to call me.