Do Investment Advisors Improve Outcomes?

TriCord Advisors Inc. |

Why pay for someone to manage your investments when you can do-it-yourself with an app or online brokerage account? Here are a few things to consider:


Perhaps the best value from working with a professional advisor is the time and mental space you free up for yourself. Most investors want to make sure their money is working for them and be confident that they are well positioned to avoid unnecessary risk and take advantage of opportunities. Having a professional you trust who is watching trends, doing research, and using his or her education and resources to manage your money allows you to let go. Life is short - do you really want to spend your free time reading charts and creating tables?


You don't know what you don't know. Professional investment advisors are constantly reading and learning about markets, taxes, estate planning, risk profiles, trends and other things to provide advice to their clients. And they get to see a diversity of client situations and solutions. Many investors are very capable of learning these things, but without dedicated time, study, and experience, an investor doing it alone is often relying on a "hot tip", "trusting their gut", or using some outdated indicator or system to make decisions. Someone needs to do the hard work for you to make smart choices that fit your situation. 


Building a portfolio is just as much about risk as it is about return. When you buy the 15 stocks through an app which you think will do well, what sort of risk do you take on? What is the max drawdown of your portfolio? Will all those stock rise and fall together? If you are just investing extra money, then perhaps treating investing like gambling and trying to make as much as possible won't be a problem for you. However, if you are building your savings for a down payment by packing lunches and skipping Starbucks, then keeping your funds secure while they grow takes on a whole new meaning. An investment advisor will work to understand your goals, timelines, risk tolerance, and other items and help a build a portfolio to get you to your goals. Your portfolio likely will include Apple and other companies you have heard of, but often also will include investments which are not sexy and are unfamiliar.  These investments are included to build a robust and productive portfolio to get you to your goals. 


“Buy low, sell high” is the mantra for any good investor. Sounds easy, right? In reality, most DIY investors suffer from emotional decision making. Is buying Tesla a "good bet on the future" or just following the crowd into a popular stock? DIY investors often hold onto winning stocks too long and sell off their dogs at the bottom of the market. It’s difficult to be emotionally unattached when it’s your money on the line, and that’s why millions of people around the world trust an advisor to make decisions on their behalf. It’s all too easy to fall into emotional traps when it comes to your money, and a good advisor can help you through the ups-and-downs of the market without buying or selling at the wrong time.


One of the most overlooked aspects of investment strategy is taxes. For example, tax loss harvesting can be a fantastic way to clean out your portfolio and offset gains each year. This is not always the right choice and needs to be done with care. When you have an investment advisor you trust who is building a portfolio to fit your situation, monitoring your investments, and taking advantage of things like tax-loss harvesting when appropriate - you can focus on your job, family, and other priorities. 


*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites