The current markets, exacerbated by negative press may cause some to
wonder why they should pay for professional management. The markets
performed well from 2009-2013 and not at all in 2014-2015. Human nature
wants us to have gains every year, even in down markets, and we’d all love
to win the Lottery too! Reality is it’s not going to happen.
Index funds, and automated advisor firms continue to put pressure on
lower costs. Having a focus on price above all else creates a disadvantage.
That’s why we encourage people to look at the value their advisor is adding. Vanguard’s research indicates that good advisors create additional return by promoting and developing proper behaviors, such as staying invested and diversified in difficult markets & sticking to the financial plan. As passively managed strategies help reduce expenses, Morningstar research makes it clear that active management can outperform, especially in rising rate environments. We use both passive and active management strategies in our various models. Doing both decreases fees which keeps more money in your accounts.
The automated advisor is designed to charge a lower fee. They use an algorithm fitting you to an investment strategy based on your risk tolerance with no customization. That’s great, but there are crucial parts the automated advisor doesn’t do. They don’t call their clients, offer to meet in person, or provide a sounding board for a second opinion. Most of all, they don’t provide comprehensive financial planning. For one example, they don’t help people understand the process of how or when to file for Social Security or Medicare Benefits. Most of these services are nuanced and therefore not scalable, which is why you won’t see those types of firms offering them.
Since 1981, we built a track record of implementing sound investment strategies and have continued to add services like comprehensive financial planning without increasing fees. We strongly believe we continue to make good choices putting our client’s best interest ahead of our own.