Does it Payoff to Have a Financial Advisor?

Valid question. Here’s a Vanguard study with the facts. Again, as I’ve always said, it depends. Your unique situation drives everything.

We’re in the fourth quarter of 2022, and I feel it’s more important now than ever to review your overall financial plan with a fiduciary level advisor. Here’s one reason from Bank of America’s investment division. BofA says, “economic growth won’t approach ‘normal’ until as late as 2025. So what? Well, this could mean your current financial plan might leave you without enough money to last your retirement. And with longevity being a huge risk in retirement, it matters. In addition, ’emotionally-charged decisions to sell off large quantities of stocks or other investments now lock in your losses, removing any chance for future growth. Research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.1

Consider this example: A recent Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.2

Assuming 5% annualized growth of $500k portfolio vs 8% annualized growth of advisor managed portfolio over 25 years. The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”. Please carefully review the methodologies employed in the Vanguard Whitepaper. The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser.

1. Journal of Retirement Study Winter (2020). The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Journal of Retirement study.

2. Vanguard (July 2022), Putting a Value on Your Value. he projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Vanguard whitepaper.

This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. The Wheeler Group LLC is a licensed Investment Advisor Representative and fiduciary-level advisor.

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