“A cynic is someone who knows the price of everything and the value of nothing.”
This week while I was surfing the internet I came across a blog post from Behavior Gap that I really enjoyed and wanted to share, “The Value of an Advisor.”
It seems that so many people are concerned about the price they have to pay for advisory services, but they have no idea how to assess the value of those services. Part of the reason is because they have no idea what a financial advisor is really supposed to do for them.
Most people are under the mistaken assumption that a financial advisor’s job is to use some highly complex and mysterious formula for predicting the movements of asset markets so that you will consistently outperform the markets. This assumption is often bolstered by the financial media and the legions of “fake” financial advisors who advertise and market their services by promising that you will achieve better returns than your neighbor if you hire them.
The real value of a financial advisor is in helping you to write an intelligent financial plan, to fund that plan with the investments most likely to achieve your goals, and to coach you to stick with those investments when the fads and fears of the market tempt you to make a mistake. No black boxes and no magic “performance” formulas. Just planning and behavioral coaching, which is likely to be worth multiples of what you will pay for it.
In short, a real advisor is adept at helping you avoid the regrettable mistakes that most people’s emotions cause them to make, as Carl Richards depicts below in a humorous way:
Thanks to Behavior Gap for the chuckle and for the reminder about the real role that an advisor should play.