The Benefits of a Wealth Management Relationship – Part 2, Ep #199

Warren Buffet has said, “investing is simple, but not easy.” If even the Oracle of Omaha admits that investing isn’t easy, what does that mean for the rest of us?

And what happens when our very human tendencies collide with our best-laid plans?

Several studies from Vanguard and Morningstar have attempted to quantify how behavioral coaching can impact your savings. The numbers settle around 1.5-2%/yr. That may not sound like much, but could equate to millions of dollars difference over 30+ years of investing.

In this episode, we continue to explore the benefits of the wealth management relationship. If you haven’t listened to the first part you can find it here.

Are you planning to fail?

Benjamin Franklin once said, “By failing to plan you are planning to fail.” That is why we always start our process by developing a plan. Do you have an investment plan in place?

The barrage of information overload with investing can often leave us frozen with our savings.  But not adjusting at times, can cost us over time. A wealth manager can help you set up your financial plan and put it into action.

Once we set up your investment plan then it’s time to act. Having a plan and acting upon it are two different things, but when you delegate your wealth-building decisions the odds are much more likely they will be implemented.

How a financial plan can help you in troubling times

When you have a plan in place you’ll understand better the things you can control in challenging circumstances. Think back to as recently as March 2020. What did you do when the market dropped over 30%?

Taking action in the face of fear, like buying stocks at a discount during this period pays off handsomely long term. Since then, the market has doubled its value.

So you not only get the price appreciation but also the compounding through the years on that growth that you wouldn’t have had if just holding your position, or worse selling stock.

Are your investments diversified?

Advisors can help you diversify your investment portfolio. Many people discount the value of diversification.

However, as we saw with the Silicon Valley Bank crisis, it doesn’t pay to have all your eggs in one basket.

Consider what would happen if there was a material decline in a certain investment sector, country (i.e. Russia), or single stock (i.e. Lehman, Silicon Valley Bank).  What impact would this have on your retirement plan if this occurred?

Are you your own worst enemy when it comes to growing your wealth?

While many people come to a financial advisor looking for answers to a pressing question, the real value is in the way advisors can help you manage potentially harmful investment impulses.

Studies have shown that investor behavior matters more to wealth building than choosing individual investments.

The wealth management relationship is a long-term investment that helps you stick with your wealth-building process. The best portfolio is the one you can stick with.

Listen to strategies of how to avoid bad decisions that can take decades to rectify and how to ensure your financial plan actually gets implemented.

Outline of This Episode

  • [1:32] Investing is simple but not easy
  • [7:25] The tax planning benefits of having an advisor
  • [11:16] How a financial planner can help in the estate planning process
  • [15:32] Why delegating your wealth management is an investment

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