Ensuring proper portfolio diversification. Understanding your most cherished financial goals. Making sure you’re on track for a comfortable retirement. These are among the many services you receive through specialized financial advice—ultimately providing you with peace of mind.
Today, however, there is a greater emphasis on the value of financial advice as the investment industry is undergoing a series of dramatic changes. These changes are driven primarily by the need for more investor-friendly communications, with an emphasis on greater transparency regarding services, fees and investment performance. There is no better time than now to discuss the value of advice.
Spotlight on investment fees
As a result of ongoing regulatory changes, investors are now receiving more information about the fees they pay. This is good news because the costs associated with investing are important. Over longer-term periods (20 or 30 years), fees can have a dramatic impact on a portfolio’s returns and the size of an investor’s portfolio.
Fees, however, are only half of the story. Because financial planning is complicated and often beyond the means of individuals, investors should seek specialized advisory services, backed by experts in their field, with high-quality recommendations and solutions in return for those fees. It is important for investors to ask two questions: How much am I paying to invest? and What value do I receive in return for the fees I pay?
Valuable reasons to use financial advice
To further emphasize the value of financial advice and what you should be receiving for the fees that you pay, here are some key benefits—among many others—that you’ll gain.
- Keeping you on track with a financial plan. Perhaps the most significant issue that investors need to think about is how their investments fit into their overall financial plan. For example, a person investing without financial advice must do more than research and constantly monitor their portfolio holdings. They also need to consider how these investments are taxed, and how they will impact their needs, goals and objectives. Qualified advisory services can offer specialized expertise that investors may not have, or have time to develop. These services are also there for you to adjust your financial plan, when unexpected life events occur or as you enter new stages in your financial life.
- Ensuring you’re well diversified. People who invest without the aid of advice may often invest the overwhelming majority of their assets in the country where they live or in one or two asset classes. Proper financial guidance ensures you’re strategically diversified across regions, sectors and investment strategies that offer different (and often better) investment opportunities.
- Helping you avoid the perils of chasing returns. In many cases, financial advice provides you much more than investment expertise. It can keep you from common emotional pitfalls like chasing returns (i.e., buying high or selling low) or reacting in other irrational ways during market volatility.
- Helping you capitalize on the best opportunities. Without the help of qualified advice, investors tend to react emotionally to volatility by pulling their money out of markets—in turn, missing some of the best investment opportunities.
- Advice helps in conclusive ways. Working with an advisor has real and measurable benefits. To learn more, read about the real, quantifiable benefits of working with an advisor over the long term.