Over the years as a financial advisor, I have heard many assumptions about a financial advisor’s role. Here are a few myths about what a financial advisor at Verisail is:
#1: An advisor should get you out of low-performing investments and into high-performing investments.
Myth. An investment strategy that’s based on predicting which investment will be on a hot streak or a losing streak isn’t likely to succeed over the long term. You have to be right twice: you have to know when to buy and when to sell or vice versa. The same goes for making investment decisions based on how you feel. As an advisor, my job is to help you stay the course and focus on what you can control. I’m with you during market ups and downs, helping you avoid the temptation to abandon your long-term plan during market swings.
#2: An advisor will only focus on your account balance and performance.
Myth. Your financial life is bigger than your portfolio. My first job is to get to know you. I then want to help you answer other questions that keep you up at night. How can I save for college? How much can I spend in retirement without running out of money? When should I claim Social Security benefits?
#3: An advisor makes changes to your portfolio every time the market swings.
Myth. Market volatility is expected. We help clients construct portfolios for the next 40 years, not the next 6-12 months. We are not rattled by various markets conditions when building a client’s portfolio.
#4: If your portfolio doesn’t include the most popular investments, your advisor isn’t doing a good job.
Myth. If your investment goal is to get in on the ground floor of the next big thing, we probably wouldn’t be a good fit for you. But if you have real-life investment goals, such as retiring in X number of years, you’ll probably be better off investing for the long term with a globally diversified portfolio.
An asset allocation that’s designed to meet your goals is the cornerstone of a solid investing strategy. Your asset allocation impacts your portfolio’s performance more than any other investing decision you make, including individual investment selection.
#5: You only need an advisor if your portfolio is complex.
Myth. You can benefit from working with an advisor because life is complex—not necessarily because you have a complex portfolio. You probably have multiple investment goals, which will change over time. Saving for a child’s college education may be a top priority today, but in 20 years, your primary focus may be on making tax-efficient withdrawals from your retirement savings.
What else? What do you expect out of your advisor?