9 July, 2019

Wealthier and Financially Healthier

People tend to think of financial advice as being purely about money management. And it’s true that Financial Advisors have been shown to add demonstrable value when it comes to asset allocation, investment performance and tax efficiency.

One study highlighted that households using an Advisor accumulate significantly higher assets over time compared to households that are unadvised.1 After four years, those who work with an Advisor amass almost double the wealth. After 15 years, advised households have four times the assets of households without an Advisor. That’s the difference between $250,000 and close to $400,000, or between $400,000 and $1.6 million!

However, the tangible value of growing my clients’ wealth captures only one aspect of the overall service I provide as an Advisor. My actual role goes far beyond offering investment advice. Even though other benefits of working with an Advisor can be harder to define because they don’t physically exist like a bigger bank account, they’re integral to your long-term financial well-being.

Clarity

For example, what are your short- and long-term goals, and how do you plan to reach these goals? The first question can be tough enough to answer, and many people draw a blank on the second one. An Advisor can get you organized, first by helping you identify what you want your life to look like five, 10, 20 and even 40 or more years away. Then, by creating a concrete plan for how you’ll reach those milestones.

Without proper planning, you run the risk of working hard without having anything to show for it – by spending more money than you earn, misallocating funds or getting too heavily into debt. Having an Advisor can bring clarity to the big transition points in your life and better equip you to handle them. While this clarity may not lend itself to being objectively quantified, its presence is clearly felt.

Accountability

Like life, financial plans aren’t set-it-and-forget-it – they demand ongoing maintenance and need to be regularly revisited. Similarly, I check in with my clients to ensure they stay on track to meet their goals.

It’s also about working with someone who keeps pushing you forward and being proactive instead of just reactive. This includes helping you take action on unforeseen scenarios or those you’d rather not think about, like preparing for serious illness or estate planning.

Behavioural coaching

Since 1994, DALBAR’s Quantitative Analysis of Investor Behavior Study has been analyzing investor returns and has consistently found that the average investor earns much less than market indices. In 2018 alone, investors lagged the S&P 500 Index by more than 5%.2

So, what’s behind this chronic underperformance? Unfortunately, investors are susceptible to emotional decision-making, buying and selling their investments at exactly the wrong time. Part psychologist, Advisors are trained to be experts both in the markets and human nature. We’re here to remind you about the financial plan you created when you were thinking rationally. We can also support you through the inevitable bad periods, when you’re more likely to be your own worst enemy by buying high or selling low.

Financial literacy

The average Canadian earns a C grade (62%) when it comes to understanding how to manage their money.3 This less-than-stellar track record underscores why educating clients is another key part of an Advisor’s value add. We’re uniquely positioned to simplify the complex for our clients, while teaching them financial skills that empower them to act in their own best interests. Having a better understanding of your situation and the larger world of finances puts you in greater control of your money and helps you feel more confident about your decisions regarding your financial future.

Peace of mind

With all the fear and anxiety people associate with the subject of money, the best thing an Advisor can do for their clients is to help them sleep better at night. An Advisor by your side to guide you through life’s ups and downs provides you with a trusted sounding board and resource. This can help take the pressure off and allow you to focus on other priorities.

For a variety of reasons, from improved health to stronger relationships, worry-free is the way to be, and Advisors have the skills and tools to get you there.

The bottom line

Although you can’t put a price tag on all the benefits of working with a knowledgeable and experienced Advisor, these benefits certainly become clear once you’ve partnered with one. Since being an Advisor is a quantifiable, numbers-oriented profession, arguably the greatest benefit clients receive is emotional, behavioural and intangible.

To discuss how you can get the most out of the value I provide, please contact our office today.

1 The Gamma Factor and the Value of Financial Advice, Centre interuniversitaire de recherche en analyse des organisations, 2016.

2 Average investor blown away by market turmoil in 2018, Dalbar Inc. press release, March 25, 2019.

3 Canadian Financial Capability Survey, 2014 , Statistics Canada.