Whether or not to hire a financial advisor, or which one to hire, is a decision that will have a big impact on your financial future. If you do so, how will it benefit you?
Vanguard Research has attempted to answer that question by developing a service model to estimate the value, or “alpha” that an advisor adds to net returns through relationship-oriented services such as financial planning and guidance, rather than trying to outperform the market. They’ve estimated that implementing their service model framework can add “about 3% in net returns.”
These findings should be taken with a great deal of skepticism; your net returns could of course be more or less than that depending on your circumstances. Still, their research might provide you with a conceptual understanding of the potential benefit of using an advisor.
For many, perhaps most investors, subjects like how to invest their money, whether or not they have enough, or how to spend it are beyond their areas of interest and understanding. For these, the specific value proposition of a financial advisor makes sense and could potentially provide some measure of net returns, at least compared to what they could accomplish without it.
For other, self-directed investors who enjoy financial subjects and have the time and interest to pursue them, hiring a financial advisor would be a waste of money except to deal with topics that are beyond their scope.
In the end, it’s a question of motivation, behavior, interests, and emotions. In which category are you?
No advisor knows the answer to that question until they get to know you and understand your specific situation, tendencies and capabilities. We don’t either.
Therefore, we at Clearity Capital will take the time to understand you and to design customized services to fit you and your needs at a cost that’s reasonable. We welcome you to contact us to find out more.