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An elderly couple sits closely on a teal sofa, smiling and looking at a tablet together. The woman, wearing glasses and a striped sweater, leans towards the man, who is wearing a dark vest over a shirt. Both appear happy and engaged, perhaps perusing the services options of their trusted advisory firm.

A Good Financial Advisor Extends Well Beyond the Portfolio

Particularly during challenging times in the market, it can be easy to forget that the end goal of comprehensive planning goes well beyond choosing investments. Investors who keep a critical eye to their portfolio may sometimes overlook other, more subtle indicators along the path to long-term financial success. These contributions are less quantifiable on a quarterly performance statement, but valuable nonetheless.

Cost-effective investment implementation: When measured against overall wealth, the costs associated with investments may feel immaterial in many people’s eyes. However, an unwatched investment expense ratio versus a carefully monitored one can become significant over time. Like any regular spending habit compounded over a period of years, decades of steep fees will, penny by penny, leave an outsized hole in your wealth. A good financial advisor will do more than choose your investments. He or she also acts as a good steward of your wealth, seeking out low costs on your behalf.

Asset location between taxable and tax-advantaged accounts: Uncle Sam is on a perpetual quest to take what he considers to be his fair share (or more) of your hard-earned wealth. Due to the complexity of the tax system, Americans will tend to overpay in taxes absent careful guardianship of accounts and asset location. A good financial advisor will proactively review and redistribute account balances as needed –saving you measurable dollars.

Regular portfolio rebalancing: Not unlike an emergency room physician who recognizes a change in vitals as a sign to change medications, financial advisors who are in tune with the market also recognize symptoms that call for change. A good advisor will no more “set it and forget it” with your portfolio than a good doctor will with your meds. Both remain on the lookout to make changes as needed in the best interest of the people they serve.

Spending strategies for drawdowns: We save our retirement funds for future use. What happens when that time comes?  Spending your retirement reserves is as much of an art as setting them aside. A good financial advisor will help you do both.

Behavioral coaching to stay the course:  If you want to earn, save, spend, invest or give more wisely, there’s no underestimating the value of personal discipline. Conquering the emotional hurdles around money is easier said than done, and a trusted financial advisor will help you stay the course.

Industry leaders like Vanguard and Morningstar recently made efforts to illustrate this value. In one report, they assert a financial advisor who goes beyond the basics by providing robust financial planning advice could add as much as 3 percentage points of value in net portfolio returns over time (4% less an assumed 1% fee).  The following example helps to illustrate this point.

Suppose the overall market return is 8%. In a worst-case scenario, lacking purposeful and well-informed financial decision making, an investor might lose up to 4% of that return to fees, taxes and other poor investment decisions.  The study asserts that if the investor had worked with a capable advisor, paying a 1% management fee to maximize value where possible, the net return would, instead, have been 7%.

The conclusion is simply that a good advisor’s value greatly exceeds the fee. Other added value may come via recommendations pertinent to where you are in life. Cash flow planning, personalized saving and spending strategies, goal-based decision making and optimizing Social Security benefits are just a few.  

Improved decision making with guidance from your advisory team can improve outcomes. According to a 2016 client survey, SYM’s clients reported a 98% satisfaction rating with their advisory relationship.
We firmly trust that the value your SYM advisory team provides, through good and poor market conditions, will pay a lifetime of dividends.  We are glad you’re here and it’s truly our pleasure to serve you and your family. If you know someone who may also benefit from SYM’s approach to planning, feel free to forward this email.

Resources: Charles Schwab, 2016 RIA Benchmarking Study, web https://www.aboutschwab.com/images/uploads/inline/RIA_Benchmarking_Study2016_Results_0716-2657.pdfVanguard, Putting a value on your value: Quantifying Vanguard Advisor’s Alpha®, Vanguard Research; August 2016, web https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_ResPuttingAValueOnValue.

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