If you believe much of the media, you hire a Financial Advisor to try to outperform the market. But what else can a Financial Advisor help with? Here are some of the better reasons:
Press you to answer questions you don’t want asked. How to plan to take care of your aging parents if you need to, whether your will is up to date, how you are going to send your kids to college, what will you do if you lose your job? These are the types of questions that make most of us too uncomfortable to ask ourselves.
Put together a financial plan. Very few people ever do this on their own, and a lot of people drag their feet on doing it with their Financial Advisor. It takes time to do and it can be painful, but putting one together matters and is extremely satisfying.
Talk you through market volatility. Most energetically claim that this is not needed. It’s hard to project forward an image of ourselves being nervous or scared, and recollection of past pain has been shown to fade over time. But another voice besides your own during tough markets can be invaluable. Everyone wants to buy low and sell high. It takes extreme discipline to do that. Many people sold at the lows after the markets crashed in 2008 and just recently have re-entered the markets after the markets have more than doubled from their lows in 2008.
Identify risks in your portfolio that you might look right past. These risks include overweight the US or being mostly invested in tech stocks. Or on the reverse having all of your assets earning .25% when inflation is rising at 3% per year.
If someone is strictly hung up on the percentage return that an advisor can add a paper titled Alpha, Beta, and Now … Gamma by David Blanchett and Paul Kaplan of Morningstar, claim that an additional 29% of retirement income (1.82% a year in return), may be realized by working with a financial planner who uses specific planning strategies
This is a great video from a financial planning company (EMoney) on the benefits of working with an advisor and how to go about selecting one.
[youtube]http://www.youtube.com/watch?v=z4H_NkJ8v24[/youtube]
Should you hire a financial advisor?
