The theme this week on the Retirement Quick Tips Podcast is: When Should I Hire A Financial Advisor?

Today, I’m talking about some of the key benefits of hiring a financial advisor. It’s hard to know what exactly you’re getting when you’re paying for the services of a financial advisor as there’s not always a deliverable at the end. 

At least when you hire an attorney or a CPA, you get a trust or other estate planning documents at the end of it or your tax return is filed. 

But when you hire a financial advisor, most of the time you’re hiring someone to manage your investments, and help you with ongoing financial and retirement planning decisions. Quantifying that advice and weighing it against the cost can be fuzzy at best. 

To help quantify the value of financial advise to weigh against the ongoing cost of hiring an advisor, Vanguard does an annual study that looks at different services advisors provide and quantifies the value of each. 

In short, here are the key areas where an advisor provides the most value:

• Suitable asset allocation using broadly diversified funds/ETFs
• Cost-effective implementation (expense ratios)
• Rebalancing
• Behavioral coaching
• Asset location
• Spending strategy (withdrawal order)
• Total return versus income investing

The total estimated annual value of these key areas is around 3% in increased returns per year. 

So if your advisor is charging a 1% fee on your total assets to manage your investments and provide financial advice, the benefit outweighs the cost 3 to 1. 

The key though is finding a proactive, sharp, and qualified advisor who will actually do these things and do them well. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance