When US stock markets are at all-time highs — as they are now — are you really going to sit down and re-assess your portfolio allocation? Maybe. Maybe not. As long as the markets are relatively calm — and especially if it’s summer — most of us don’t care to manage our investment risk and verify that our finances are in fact supporting our life goals. Then when a market downturn does happen and we’re caught off guard, there’s a great urge to “sell now,” endangering years of wealth accumulation.
Making sure you’re on track to attain your life goals — regardless of the market environment — is one of the key things we do here at LNWM. What’s the value of that? Back in 2014, Vanguard actually did a study that estimated the value-add of effective financial advisors.
Below are estimates from the Vanguard white paper (published in 2014), regarding the value added to long-term annualized returns by these key services:
- BEHAVIORAL COACHING IN EXTREME MARKETS — Value-added estimate: +1.50%
- ASSET LOCATION AND SPENDING STRATEGIES — Value-added estimate: +0% to 1.45%
- COST-EFFECTIVE IMPLEMENTATION — Value-added estimate: +0.45%
- PORTFOLIO REBALANCING — Value-added estimate: +0.35%
Is it possible to put specific numbers on the value added by wealth advisors? We don’t think so. But we do think that we bring value to the table for each client in each of the above areas, especially since our efforts are part of an overall financial plan that includes tax and estate planning. We have seen that timely, integrated and goal-focused financial advice is the best way to help clients achieve their goals. At LNWM, the number we care about most is your risk-adjusted net return (after taxes and inflation) across your entire asset base. Not long ago, we wrote about the lifetime advantage provided by LNWM’s integrated approach to wealth planning. Read about that here.