A prospective client asked me the other day to tell them why they might not want to hire us as their financial advisors. I thought that was such an interesting question that it kept resurfacing in my mind over the next several days. Had he asked me to tell him what value we could provide, well, I'd have probably a dozen or so ready answers. As a financial expert, I like to think that everyone needs good financial advice, but what kind of person genuinely should not hire an expert? That's such a great question that it deserves a thoughtful response. Here are a few potential replies:
You absolutely love DIY investing (and you're good at it). My first thought was of the staunch do-it-yourselfers. If you're one of these guys, you love investments so much that you will happily spend hours digging into the details surrounding a particular stock or bond, a specific fund or market sector, or a distinct investment strategy or even a series of investment strategies. You will have read enough of the right things to understand how the market works and where to invest your money to achieve pretty decent returns. You will pore over statements looking for where you may can eke out a few extra fractions of a percentage point. You'll watch the market throughout the day, make slight adjustments to your portfolio here and there, and will generally come out doing pretty well. The caveat? Despite all of the hours you put in (and despite how much fun this can be), there will be missed opportunities for realizing value.
The trouble is, investing and financial management may not be your day job. For us it is. While I do enjoy a day off and a vacation from time to time, our staff are more than capable of keeping things running smoothly. We provide continuous service, even when you decide that you don't want to handle it anymore.
There's also tremendous value in having an objective, outside perspective on your finances. Money is a very personal and often emotional business to navigate. Even the most logical and stoic among us can get tripped up by our emotions and our biases and may find ourselves making financial choices that are not ultimately in our own best interest. A professional advisor whom you trust can help here.
Your wealth is income, fixed and you are pretty satisfied with your life. You have a known, fixed source of income, and the money it will generate is enough to meet your needs and wants throughout the remainder of your life. If you have truly maximized your wealth and well being, you may feel pretty well set.
What value can we add as financial advisors? For one, we can help you with not just your investments, but rather with the whole financial planning process. We can help you to take a step back and look at the various pieces of your financial life as a whole: income, expenses, insurance, tax strategy, investing, retirement planning, gifting, and estate planning. What we hope to do for each client is to help him or her craft a life that is enjoyable, sustainable, and in line with that particular client's values.
You enjoy doing the research to see if a particular bit of advice applies to you. Not only do you understand and enjoy investing, you enjoy all of the other pieces of the personal finance puzzle. You've read the instructions to the 1040, the WeWork S-1 and a few annuity contracts. Nothing makes you happier than to spend hours researching all of the minutia related to your financial situation, weighing the pros and cons of various options, and choosing and implementing the best course of action. If this is you, you're your own financial planner. Congratulations!
For many people, this may be where we provide the most value. Even for the most curious puzzle solver, an objective third party can help with research and help you confirm that your decisions are appropriate and free from hidden risks. We can also help with many of the details that may be overlooked or just unknown by the DIY investor. With a combined 40 years of experience, we are knowledgeable across a wide variety of personal and financial circumstances. In addition to this, products, services, and regulations change regularly and we work diligently to stay on top of these changes.
I tell my clients all of the time that all of the knowledge that I have is available to the public, there are no secrets and no magic. The trick is getting the right information. With so much out there, the vast majority of what you read online is either inappropriate for your situation or directly harmful to you. I see too often thoughtful, well educated people making great decisions that simply are not appropriate for their situation or goals. Having a professional on your team, who's interests are aligned with growing your wealth is valuable for any level of involvement.
You have high return expectations.
We are investment advisors. Nancy and I are CFA charterholders. We
have spent years studying, exploring and participating in financial
markets. We are finance nerds. From all of our knowledge, I can tell you
exactly one thing for sure: the future is uncertain. That means that
when you reach for higher return, you are taking higher risk. If your expectations for your portfolio are significantly higher than market returns, we may not be able to help you.
You are so focused on keeping costs "low" that you are willing to lose sight of the bigger picture. Some people are extremely cost-conscious. They cringe at the thought of paying management fees, advisory fees, even hourly fees. If the thought of handing over $1,000 in fees makes you feel sick to your stomach, I completely understand! I've felt that way plenty of times myself. What I don't want you to do, though, is hold onto that $1,000 but miss learning about and taking advantage of a tax strategy that could save you, oh say, $90,000. That's not good math.
As Warren Buffet says - "price is what you pay, but value is what you get."
Helping you to increase the number on your balance sheet is great, but we like to think that our value is broader than that. We connect your portfolio with your values and goals. When the market turns, we have calculated that as a risk that you can bear. When you are depending on your portfolio for income, we take care to keep the money you need tomorrow available and safe from the near-term swings of the stock market. We help you and your family to live the life you envision with minimal stress, worry, and hassle. It's difficult to put a price on that.