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Three Overlooked Benefits Of Working With A Financial Advisor

Forbes Finance Council

Bill Keen is the Founder and CEO of Keen Wealth Advisors and the Best-Selling Author of Keen on Retirement.

As the founder and CEO of Keen Wealth Advisors, there’s a question I’ve come to expect from many of my potential clients: “When I pay you a fee as my advisor, what am I getting in return?”

Within the context of investing, return on investment (ROI) is of the utmost importance. I don’t balk at the question because I would expect sharp investors to question the ROI on everything. The point I try to emphasize, though, is that a fee for an advisor should be seen as an investment, not an expense.

There are tangible financial benefits to working with an advisor, like diversification, proactive retirement planning and rebalancing. But there are also personal benefits that can make the processes of investing and retirement planning less stressful. I’d like to detail a few of those, so you can see why I advocate viewing your advisor’s fee as an investment and not an expense — there’s serious ROI involved.

Benefit 1: Emotional Guardrails

I’ve written before about the importance of keeping your politics separate from your investing and managing your market psychology. Both topics speak to the same underlying issue: your emotions, which can wreck even the most well-built financial plan. A good advisor will help protect you from yourself, and if you have the self-awareness to know that you occasionally make rash or emotion-fueled decisions, having those “guardrails” is invaluable.

No, your advisor can’t stop you from feeling whatever emotions you’re feeling, just like the guardrail can’t stop every car from going into the ditch. In those moments where you want to push the eject button because you’re scared, the advisor’s job is to remind you of the plan you created and what you’re working toward: a fulfilling and successful retirement.

Benefit 2: A Comprehensive Plan

I mentioned a plan earlier, and that’s a second benefit of working with an advisor: having a plan that considers factors you might not be considering. You might be looking at what investments to add to your portfolio, and that’s no doubt an important piece of the puzzle.

But have you considered tax planning? What about developing a spending plan or combatting inflation during your retirement? Then there’s healthcare: What does your plan include about Medicare or dealing with medical expenses?

You can pull all these pieces together yourself — just keep in mind that the landscape is always shifting. New laws and regulations are passed every year that can impact your plan. If you want to keep track of it, go for it. The other option is to outsource it to an advisor whose job is making sure that your plan stays updated and you stay on track toward your goals.

Benefit 3: A Champion For Your Success

Investing and planning for retirement is difficult. Wouldn’t it be nice to embark on that endeavor with someone in your corner who’s as invested in your success as you are?

I’m talking about someone who thoroughly knows you, your spouse, kids, job, dreams, hopes, goals and the future you one day hope to achieve. Not only do they know you, but they’re proactively working to bring these things to fruition.

Just knowing that someone cares about you in this way is psychologically impactful. It’s part of the reason people hire personal trainers or business coaches.

An advisor who is worth their fee won’t only set you up for success, but they’ll also be rooting for you every step of the way. If you don’t have that connection with your advisor, I would say keep looking until you find it. 

An Investment In Your Future

The reason I wanted to write this article was to draw attention to some of the benefits of working with an advisor that I believe don’t get discussed enough when the fee gets brought up. Is your advisor’s fee an expense? Yes, it does cost you money. But it’s more than that.

It’s also an investment because unlike an expense, which is defined as “the cost required for something,” an investment is “worth buying because it may be profitable or useful in the future.” An advisor’s fee is the cost of doing business with them. But I think if you examine the ROI, you’ll see it’s worth buying because of what you could get out of it now and down the road. 

All this to say, these three benefits don’t replace competency, performance or results. Your advisor might be good at crafting a plan or talking you off the ledge, but if your portfolio is performing poorly because of choices they’ve made, they might not be the best fit for you.

If you’re looking for a new advisor or already working with one, you need to make sure they’re the best fit to help you achieve your long-term goals. It’s not enough to like your advisor, though it is important to have a rapport with them. You have to dig deeper than that, and to do so, I recommend asking a few key questions:

• What kind of education do you provide clients?

• What kind of continuing education do you do yourself?

• What kinds of questions do you ask clients?

• What is the total cost to a client?

• Do you use a checklist-driven process to advise families?

Beyond that, make sure there isn’t a conflict of interest with the custodian who handles your assets. If their advisory firm is owned by the same company that’s directing the investments and accounts, that’s a huge red flag. 

I would encourage you to seek out the help of a fiduciary and be leery of anyone operating under the “suitability standard.” Finally, only work with a financial advisor you know is committed to your well-being. That should never be in doubt. If you’re ever made to feel like a number, you deserve better. Find an advisor who values the relationship and will stick with you through all of life’s changes — because you’re going to need them.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.


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