Great wealth management advice should cost you much less in the long term than no advice at all. Not all advisors are the same, but if you do find a great one, it’s important to think about the overall value they can provide when considering costs.
A Great Workout.
Hiring a wealth manager depends on your specific financial needs. The decision to hire a wealth advisor could free up valuable time, reduce stress levels, and add potentially thousands of dollars in untapped after-tax wealth.
Many people compare wealth advisors to personal trainers. In the gym, your trainer bears the responsibility of planning – you communicate your goals, the trainer reviews them and comes back with a plan to achieve them. When you’re having trouble understanding an exercise, they’re available for guidance.
A wealth advisor serves a similar purpose. A great advisor will listen to your goals and design a plan to achieve them. When you’re struggling with what to do next, your advisor can guide you with clear recommendations and help you to stay on track.
An advisor can help educate, hold you accountable, and reaffirm your commitment to your wealth goals. Just like a personal trainer can jump-start your results in the gym, the right advisor can help you build and grow your wealth.
The Hidden Costs of DIY.
While it may seem that handling your own finances personally can save you money, this is only partially true, and often only in the short term. Without expert guidance, there’s a high likelihood that you’re leaving money on the table. Sure, you may save on fees today, but you’ll potentially pay much more in lost wealth in the future.
A study by Vanguard suggests that a good wealth advisor can add as much as 3% net returns to your overall portfolio. The additional returns are not driven by “beating the market” but rather by helping you to avoid behavioral bias-driven investment mistakes and by helping you to implement a cost and tax-effective strategy.
DIY wealth planning also incurs a massive time cost. If you choose to forgo expert guidance, you may invest hours into research, implementation, and still lack validation.
Constructing a well organized financial plan and executing with the right products is not as easy as it may sound. Lets use the example of painting a house. With some time, you could learn how to do it yourself, familiarize yourself with the techniques, and purchase the necessary equipment. Then the huge allotment of time to actually paint it. The time value of financial advisors is similar. A great advisor becomes your household CFO, which allows you to focus on doing what generated your success in the first place, as well as free up time to spend with loved ones.
Hitting The Gym.
We all have busy lives. We are pulled in a million different directions all day, every day. Hiring an advisor will not only help you feel less stretched (and stressed) but it can actually increase your wealth and allow you to achieve your goals. Having a Personal Wealth Trainer can allow you to live the life you want.
Disclosures: Aventine Financial Group LLC (“Aventine” or “we”) is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply any level of skill or training. The content provided herein is for informational purposes only and is not intended as a recommendation, offer, or solicitation to buy or sell any security or investment strategy. This material does not establish an investment advisory relationship with Aventine, take into account individual circumstances or objectives, or constitute personalized investment advice. Aventine offers a broad range of investment management and financial planning services. For more information about our services and fees, please request a copy of our Form CRS (Client Relationship Summary) and Form ADV Part 2A (Firm Brochure). Neither Aventine nor its investment adviser representatives provide legal, tax, or accounting advice. You should consult your legal and tax advisers before making any financial decisions. Investing involves risk, including the potential loss of principal. There is no guarantee that any investment strategy will be successful. While diversification, asset allocation, and rebalancing strategies may help manage risk, they cannot eliminate the risk of loss in declining markets. Past performance does not guarantee future results. Any references to market indices are for illustrative purposes only and represent unmanaged groups of securities that cannot be invested in directly. Index performance assumes the reinvestment of income, dividends, and other earnings but does not reflect the deduction of advisory fees, transaction costs, or other expenses that would reduce returns. References to specific indices should not be construed as an indication that Aventine’s strategies will have similar composition or performance.