Can You Afford to Go It Alone?

The difference a qualified financial advisor can make

Many of us hire an accountant ahead of tax day or look to a realtor to help with a property sale. And we all rely on medical experts when it comes to our own well-being.


Why should our financial health be any different?


Investing is an area where drawing on the expertise of a dedicated professional—one who understands the market and knows how to design a plan that meets your needs—can have a profound impact. That impact can be measured both in dollars and in peace of mind. An advisor can also help with things like estate planning, designing a college savings plan for your kids or grandkids, and making tax-informed investing choices. And an advisor can fill another simple but crucial role: helping you navigate the complicated, often emotional, world of investing. They can do this by providing thoughtful, reasoned advice when stock swings and hyperactive headlines may distract you from your goals. An advisor can temper expectations when markets surge and offer reassurance when they fall.


If you’re still not sure an advisor is right for you, consider some key questions.

Do I have the expertise?

Having a diversified portfolio—one that holds investments that follow what financial science has taught us—can help manage risk and put you in position to capture returns when and where they appear. It takes expertise to build a global portfolio of stock and bond investments that is right for your circumstances, whether that’s looking toward retirement, scheduling charitable donations, or passing wealth to your heirs.

HAVING A FINANCIAL COACH IN YOUR CORNER

The advisor's interaction with clients is not a, I'm gonna look in the crystal ball and tell you what to buy and make a transaction fee off that. It's sitting down with you and understanding who you are as a client. The advisor knows your aspirations. They know how many kids you have. They know if you have a mortgage you have to pay. They know what kind of cash buffer you have, to make sure you're gonna be okay if the markets go down by 50%. All of those questions become part of the dialogue and interaction with the advisor. A lot of people bailed out of the stock market when it dropped a lot in the face of the pandemic. A lot of advisors didn't flinch. They kept their people invested, and in fact, a lot of them took the opportunity to invest more in stocks. It's difficult to avoid the emotion. And those human emotions are fear and greed. The whole process, the whole discipline is to be able to avoid that emotion. And not have that be part of your investment decision making. And that's where a coach comes in. You know, an advisor comes in to basically coach clients to not make those dumb mistakes, so that when that moment comes, when they say, ah, I'm a little too fearful of the market, you know, they help them stay in the market. Or, I'd like to turn up the dial a little bit on my stock allocation, and the advisor can say, you're good where you are. We don't know where the market's gonna go, yet we have a plan in place. Whatever happens to the market, I have an idea of what I'm going to do. Once you realize that you're gonna be able to get back on track, regardless of what happens to the market, if you've done your planning correctly, then life gets to be pretty good. As the world gets more complex, the best outcome for the individual is that combination, great asset management, and then great advice.

An advisor understands your options in the ever-shifting landscape of investment choices—mutual funds, ETFs, separately managed accounts, 401(k)s, and more. They can help you target performance that generates long-term wealth. They can track the impact that fees are having on your returns. They can help monitor progress toward achieving your goals. When and how you hold your investments will affect the returns you see after taxes too.

Do I have the time?

A skilled financial advisor makes it their business to do more than know the basics of investing. They follow the latest research to help you make decisions that are informed by data and backed by years of academic scholarship. They monitor changes in your asset allocation over time and advise on rebalancing, so you can keep your portfolio on target. They track changes in tax laws and financial regulations to make sure you’re taking advantage of new opportunities and keeping your accounts positioned for the best outcomes.


And crucially, an advisor makes it their job to follow the markets so you don’t have to. When you’re adhering to an established plan developed with an advisor, that’s time saved every day—time you don’t have to spend tracking financial news for fear of missing something important. An advisor can free you from much watching, wondering, and worrying.

Redefining Financial Advice

From the earliest ages that I can remember, I wanted to get into investments, and so, I became a stock broker. And then I realized very quickly, that really wasn't investing, that was selling. When I first came into the industry, there were brokers, and there were people making cold calls. There was pressure to make more money, and I got a sense that I was stealing from people who weren't really know what they were buying. Literally that whole culture was "I need to make some commissions this month, I haven't talked to Joe for a while, I know Joe's got some extra money, I'm gonna call him and pitch this idea and see if it works for him". You really just want to close the sale, you're often tempted to sell the most expensive products. That's when I decided, I wanted to make a change. It's about 1993, '94 and we're hearing more and more about this fee model. Fee-based investing simply means we're not compensated by any products, by any commissions, we're only working for our clients. A lot of time I'm spending with clients, I'm not generating transactions of any sort. I'm asking about families, I'm asking about goals and dreams. So the process really starts with a lot of listening and understanding, what money means to the client, and where they want to be. But you don't sell performance. You sell a goal, you manage behavior. What they're really looking for is someone who can help them cut through all of the noise, all of the information that's coming at them. What every advisor has, is they're able to engender a relationship and trust with a client. Trust is the grease that kind of lubricates the wheels of the entire financial process. I think the big leap, is not just saying we put the client first, but actually putting the client first and putting your business second, and realizing that if you do well by the client, your business will do well. We must not just see our job as managing money, but in fact, you know, it's about managing lives. The spouse of one of my clients, she said, "You gave me my husband back. He stopped watching the market, he stopped watching the portfolio, he quit trying to manage this at night when he came home, and so you gave me my husband back, and all that time". I wake up everyday feeling great and proud and inspired, because financial advice, good financial planning changes lives.

Do I have the discipline?

The benefit of a trusted professional helping keep you on course isn’t measured just in hours spent managing finances. There’s also the freedom from anxiety and stress over whether you should do something and when. If you have an established plan, the answer more often than not will simply be: “Stay the course. Let the plan work for you.”

THE DIFFERENCE THE RIGHT FINANCIAL ADVISOR MAKES

The stock market on a rocket ride, blasting through a ceiling and closing at an all time high. Cheers of joy on the trading floor. The internet revolution and the rise and fall of the internet stock bubble has become one of the most dramatic business stories of our time. In April of 2000, the bubble burst, with an NASDAQ collapsed and dozens of .coms folding, losing billions. If I'd have taken your advice at any point in the last two or three years, I'd have lost a fortune. Bear Stearns is fine. Do not take your money out. It's also nearly mid November, and covid numbers are climbing. Interest rates and the war in Ukraine have many on Wall Street worried about the possibility of a recession. In market value, today alone, the numbers even more dramatic when you're looking at

But that can be hard. It’s hard when the media is buzzing about the latest tech firm on the rise or attention-seeking crypto asset. It’s hard when your portfolio suddenly dips—or pops to a record high—and the voice in your head urges action.


Because, at the end of the day, perhaps the most valuable thing a financial advisor has to offer is calm. The calm that comes from knowing your investments are backed by financial science. The calm that comes from the confidence that you’re on the right track to meeting your goals, no matter the headlines. And the calm that comes from the reassurance that someone with clarity and objectivity is looking out for your best interests, especially when the ride gets rough.


That’s why the choices you make about an advisor—someone who understands markets and can help you navigate both tranquil seas and rough waters—can be as important as your choice of investments. Quality advice can have a profound impact on your overall financial experience, delivering in ways that go far beyond a simple rate of return. Because a successful experience ought to be defined by both the destination and the journey.

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Diversification does not eliminate the risk of market loss.


Dimensional makes no representation as to the suitability of any advisor, and we do not endorse, recommend, or guarantee the services of any advisor. Individuals should carefully evaluate any advisor whom they may consider hiring. Individuals are responsible for monitoring their advisor’s investment performance.