We’ve talked before about the value of a financial planner, but the current pandemic has brought certain aspects of this value into sharper focus. One could construct a laundry list of reasons a financial planner can be an important partner, but I really liked a recent Vanguard study that organized these benefits into three categories: portfolio value, financial value and emotional value.
Portfolio Value. Fee-Only financial planners can help you create additional wealth. With the creation of an investment plan, an advisor can assist in growing your assets to meet your financial goals and to help insulate them from the ups and downs that we must expect. They will also help you focus on net return – that is, taking fees, taxes and other costs into account to maximize what stays in your pocket. In its study, Vanguard found that working with an advisor can add up to 3% in net returns, particularly for taxable investors.
Pandemic Perspective. All three major indices were down 20-35% in March. Ouch! (They have been recovering since with NASDAQ leading the way.) Your advisor should have diversified your investments before the pandemic in order to insulate you from these unprecedented conditions as much as possible. Portfolio value also meant understanding and reacting to changes in income tax rules and as well as to the Required Minimum Distribution rules.
Financial Value. Fee-Only financial planners can help protect your wealth. They help you set goals and develop plans to meet those goals — such as saving for college, retirement and for any estate aspirations. They aid in controlling expenses through spending plans and debt management. And, they can help protect your wealth from catastrophes through things like life insurance, liability insurance and health insurance.
Pandemic Perspective. For some of us, a job loss profoundly affected income. Hopefully you had a rainy-day fund to help you through tough times. Even if you didn’t, this is a great reminder to start building one for next time. For the rest of us, income was probably affected in one way or another such as by decreased investment returns. With reduced income, some of us faced increased debt levels. It’s nice to have an advisor who’s familiar with the various debt-relief programs that are being offered. Some companies and institutions have decreased or even suspended their retirement savings contributions. For those who can, it’s been important to increase our personal contributions to stay on track for retirement. If you or a family member did contract coronavirus, healthcare costs were a major concern and hopefully you were covered by a good insurance plan.
Emotional Value. Fee-Only financial planners can help by reducing the anxiety of financial ups and downs that are simply part of life. A fiduciary advisor (if he or she is a Certified Financial Planner TM) should help reduce some of your financial worries as they are required to act in your financial best interests.
Pandemic Perspective. The emotional value of having a financial advisor during these times is huge. It’s so reassuring to have someone who has seen the ups and downs before and who can reassure you that things will recover. It lets you focus on things like how to handle your kids’ schooling and how to go to work safely. And, should your family be negatively affected by COVID 19, it is such a comfort to have an advisor who understands your financial situation and is there to help.
These are tough times and we’d like to help you in any way that we can. We’re available to discuss your situation in a no-charge, no-obligation initial meeting. Please visit our website or give us a call at 970.419.8212 to set up an in-person or virtual meeting.
This article is for informational purposes only. This website does not provide tax or investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Please consult your tax or investment advisor for specific advice.