Are Financial Advisors Worth The Fees They Charge?

Well, it depends on the advisor, I guess.  But Vanguard did a study in 2017 that found "with advisors, investors (over time) gain about 3% per year in value for their investments, compared to what they would get by not employing an advisor."  That's great but rather measly in my opinion.  A well done plan can make huge differences in client outcomes, even in the short term, delivering outcomes often more important than just investment returns.

In addition to the Fifty Things listed below, I think at the top of the list is that experienced, compliant fiduciary advisers put a great deal of effort into knowing their clients.  This is often frustrating to clients who want their personal financial entertainer (like the ones they read about or watch on TV) to just tell them what to do or which investments to buy.  But it takes several hours of meetings to figure out who you are, what your goals are, the nature of your current assets and how those fit in with the life you envision.

I hope you find this list useful, so you know what to expect.

Gary

50 Things a Fiduciary Financial Advisor Does for You

 INVESTMENT PLANNING

1. Cares more about you and your money than anyone who doesn’t share your last name.

2. Guides you to think about areas of your financial life you may not have considered.

3. Formalizes your goals and puts them in writing.

4. Helps you prioritize your financial opportunities.

5. Helps you determine realistic goals.

6. Studies possible alternatives that could meet your goals.

7. Prepares an investment plan and/or an investment policy statement for you.

8. Suggests creative alternatives that you may not have considered including the best way to claim Social Security.

9. Reviews and recommends life insurance policies to protect your family.

10. Assists you in setting up a company retirement plan.

11. Assists in preparing an estate investment plan for you.

12. Reviews your children’s custodial accounts and 529 plans.

 13. Helps you determine your IRA Required Minimum Distribution.

14. Provides reminders about key investment planning data.

15. Checks with you before the end of the year to identify any last minute investment planning needs.

16. Guides you on ways to fund health care in retirement.

INVESTMENTS

17. Prepares an asset allocation for you so you can achieve the best rate of return for a given level of risk tolerance.

18. Stays up to date on changes in the investment world.

19. Monitors your investments.

20. Reviews your investments in your company 401(k) or 403(b) plans.

21. Reviews your existing IRAs.

22. Helps convert your investments to long lasting income.

23. Refers you to banking establishments for loan and trust alternatives.  (I don’t do this)

24. Suggests alternatives to increase your income during retirement.

25. Records and researches your cost basis on securities.

26. Provides you with unbiased investment research.

27. Provides you with personal investment analysis.

28. Determines the risk level of your existing portfolio.

29. Helps you consolidate and simplify your investments.

30. Can provide you with technical, fundamental, and quantitative investment analysis.

31. Provides introductions to money managers.

32. Shows you how to access your statements and other information online.

TAXES

33. Suggests alternatives to lower your taxes during retirement.

34. Reviews your tax returns with an eye to possible savings in the future.

35. Stays up to date on tax law changes.

36. Helps you reduce your taxes with your tax advisor.

37. Repositions investments to take full advantage of tax law provisions.

38. Works with your tax and legal advisors to help you meet your financial goals.

PERSON-TO-PERSON

39. Monitors changes in your life and family situation.

40. Proactively keeps in touch with you.

41. Serves as a human glossary of financial terms such as beta, P/E ratio, and Sharpe ratio.

42. Provides referrals to other professionals, such as accountants and attorneys (depending you your situation).

43. Shares the experience of hundreds of his clients who have faced circumstances similar to yours.

44. Helps with the continuity of your family’s investment plan through generations.

45 Facilitates the transfer of investments from individual names to trust, or from an owner through to beneficiaries.

46. Keeps you on track.

47. Identifies your savings shortfalls.

48. Develops and monitors a strategy for debt reduction.

49. Is a wise sounding board for ideas you are considering.

50. Is honest with you.

Your Constructive Comments are Welcome!