Advisors provide many services over and above the delivery of products. These are the more valuable and least seen.
The best advisors help you assign meaning to your financial decisions and help you stay the course.
I have previously mentioned the advisor role of conscience. The idea that some one can remind you of your real purpose. “I know you need a bass boat, but when you put the money away it was to provide for education costs. Have your priorities changed?” Banks and online brokerages do not provide that service.
There is the role of cheerleader. All financial planning is difficult to implement and long implementation requires motivation. A cheerleader helps. You won’t find those at the teller’s desk at a bank or dealing with a robot.
The voice of reason should appear once in a while. Fear and greed get in the way of long term success. Someone to remind you that, “A sharp drop in the market is not life threatening because markets even out and you don’t need the money now. You recall that we talked about variability as a factor in the market and that over time it all cancels. Come back in off the ledge and we will see what tomorrow brings.”
The communicator role matters. “Let me call your lawyer and accountant and outline what we are doing and why. I know what they need and it would be hard for you to give them all the information.”
The lifeguard role. Everyone has a good idea that won’t work. An advisor that can listen and offer background information can help prevent an enormous loss. Sometimes private equity deals come along and getting in on the ground floor is always good, right? Venture capital firms fund about one of every 200 deals they see. They lose on 4 out of 5 they fund. “Are you better at picking winners than they are?” or maybe, “I know someone who can help get you out of that deal.”
The encyclopedia role. No one who has a job, family and other obligations can keep up to date on everything they need to know about financial plans, products and the law surrounding those. Neither can advisors, but they come a lot closer than you will. They spend job time on that and they have networks of others who know more. You don’t need to know everything if you know where to find information when you want it. Keep in touch with your advisor. Ask for input. You don’t need to know answers, you need to know questions.
Advisors who actually try to help with financial planning can be a valuable resource. Pay attention to all of the values they provide, not just the products they arrange for you. You will find that incompetent ones can provide products but only a few can provide the softer benefits.
If you don’t know how, know who.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772