Now more than ever: The value of having an advisor to lean on

By David Koch, CFP®, AIF®, CFA, Senior Wealth Advisor

It’s never too late to have a financial advisor in your corner. In fact, this is the time that advisors can prove their value to their clients decisively.

We all know that working with an advisor doesn’t make your investments immune to market gyrations. But in both the short and the long run, you’ll likely get through challenging market environments with less pain and suffering. I’ve put together this list of key reasons why people need an advisor right now – more than ever.

Advisors are professional investors. They’ve seen this movie before. Here at Halbert Hargrove, we’re still affected by the huge market upheavals (of course!), but we’re less fettered emotionally: We’ve been trained well. We know that historically, recoveries inevitably follow periods of extreme market duress. We bring a seasoned perspective to every market environment, to every client, every day.

Advisors are more surgical and disciplined in their approaches and techniques. When markets are in chaos, free fall, or frothy ascent, advisors’ training and discipline safeguard client portfolios from compulsive moves driven by feelings like fear, panic, and greed. This holds true in all market environments, including periods of extreme decline, and during times when exuberance becomes increasingly irrational (more on this below).

Vanguard’s estimate: A good advisor can add about 3% per year in benefits to their clients, and half of that is through behavioral guidance (Vanguard Study).According to Vanguard: “This return is not added over a specific time frame but varies each year and according to client circumstances. It can be added quickly and dramatically, especially during periods of market decline or euphoria.” To paraphrase Warren Buffet, a good advisor can enable you to benefit from being greedy when others are fearful and fearful when others are greedy.

Advisors help you make “the best decisions” according to Morningstar (Morningstar Study). A 2019 study by Morningstar found that “the quality of household decisions varies across sources but that households using a financial planner made the best decisions.” Advisors worth their salt help their clients with a broad spectrum of financial decisions, from approaches to supporting aging parents to planning for family members’ education – to holding back from rash investment moves. They help clients understand their finances in terms of both managing risks, as well as reaching for goals.

If you’re freaking out, it’s probably already too late to “do something.” Here’s the inevitable kicker: If you had a good advisor, they’d tell you this. And they might succeed in talking you out of a freakout. A tragic case in point is a client who cut their life’s savings in half by going to cash at the bottom of the market … twice … in 2002 and 2009. They ultimately hired us in 2016.

And finally, I’m rather partial to this one:

An advisor is someone that you can talk to, a sounding board, who has nothing to sell you and to whom you can confidently voice your deepest and darkest fears and concerns. I’d consider this relationship vital – especially in times like these.

For more information or questions, please contact Halbert Hargrove at hhteam@halberthargrove.com