Wednesday, January 19, 2022

Do I Need a Financial Advisor?

Ask The CFP® Practitioner

“Time is your friend, impulse is your enemy.”

~ John Bogle, Founder,the Vanguard Group

Question: I’m trying to decide if I should work with a financial advisor. Understandably, I expect you’ll say yes, but can you explain why and provide specific reasons?

Answer: Well, you are right, I do recommend that in most instances there are benefits to working with a financial advisor, but not everyone needs to do so. The answer will depend on one’s ability and willingness to devote the necessary time to study market conditions, various geopolitical events, and overall economic activity to manage their finances. Behavioral tendencies, temperament, and emotional intelligence matter as well. Value is in the eye of the beholder. Just because I could paint my own house, or change the oil in my car, doesn’t mean that I should do so.

An advisor’s experience and education are key to a successful relationship along with the ability and willingness to keep up with rapidly changing communication methods and technology. In contrast, online trading and robo-advisors are an option but may not provide the level of human contact that someone may desire or require. You’re a person, not a portfolio. A trusted financial advisor, preferably a CERTIFIED FINANCIAL PLANNING™ Professional, not a computer algorithm, will get to know you, your family, and your financial behaviors, wants and needs. Fidelity Investments and Vanguard both estimate that working with an advisor adds quantitative value of about 3% on a net basis (4% minus a 1% fee).*

In addition, financial confidence may be increased by working with an advisor:

1. Creation of a financial plan or investment policy statement

Financial planning is far more than just picking stocks. Setting priorities, identifying opportunities, and recognizing areas of vulnerability with an objective eye are valuable services; especially as finances become more complex approaching retirement.

2. Maintaining an investment strategy with rebalancing

Human beings are emotional. According to a 2016 DALBAR Quantitative Analysis of Investor Behavior (QAIB), investors consistently earn less than institutional investors because of emotions; we overreact. QAIB found that “investment results are more dependent on investor behavior than on fund-performance. Mutual fund investors who hold on to their investments have been more successful than those who try to time the market.”

3. Standardizing retirement savings and spending

It’s easy to ignore the need for planning until it’s too late. Many Americans don’t have adequate savings for retirement. Lifespans are longer, medical care is expensive and the cost of living continues to rise. Working with a financial advisor to identify income needs and goals, recommend strategies, and suggest an optimal retirement age may add to your peace of mind.

4. Providing estate and tax planning strategies

Financial planning includes tax efficiency. It’s said that investing is more about what you keep than what you make. Charitable giving, tax-loss harvesting, realization of capital gains, gifting techniques and other strategies, although not everyone’s main focus, may provide the opportunity to improve your financial planning experience.

5. Functioning as a Behavioral Coach

The 24/7 world of technology and information can be overwhelming. Sorting through the maze of true, false, useful, useless and fake news is too much for most people. Doing so with an objective approach, discipline and structure is something a professional can help you achieve. There are four common investor prejudices or problems; overconfidence, familiarity, loss aversion, and mental accounting. Decisions we make are subconsciously influenced and shaped by these factors. Having professional help to reduce poor financial decisions and avoid trend-chasing behavior are additional possible benefits of working with a financial advisor.

As life evolves, investment objectives will likely change. Strategies and portfolio construction are examined to make sure that your investments match current goals. The secret sauce of a strong relationship with your chosen financial advisor has three primary ingredients; trust, proactive portfolio monitoring, and communication. When interviewing financial advisors, do your homework by visiting these two sites for employment history, certifications, licenses, and any disclosures or violations: Find a CFP® Professional at and BrokerCheck Stay focused and plan accordingly.

*Vanguard’s research paper Putting a Value on Your Value: Quantifying Vanguard Advisor’s Alpha and Fidelity’s The Value of Advice 12/13/2017. All investments are subject to risk. The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time. There is no assurance that any investment strategy will be successful. Diversification alone does not ensure a profit or guarantee against a loss. There may be tax-consequences to rebalancing portfolios. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” Links are being provided for information purposes only.  Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed web sites or their respective sponsors. Raymond James is not responsible for the content of any web site or the collection or use of information regarding any web site’s users and/or members.

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC, 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email Website:

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