You have many options when it comes to preparing for your financial future and getting your money to work for you. One such way is through a financial advisor. These financial professionals help you navigate the world of finance, investing your money wisely to set you up for retirement – or, simply build a large nest egg that eventually earns you supplemental income.
But, are financial advisors really the best way to do this? In comparison to their costs, financial advisors may fall short in terms of the value they provide you.
These days, people like you are forgoing a financial advisor in favor of alternatives. The fact of the matter is that you can do everything a financial advisor does. With just a bit of guidance on getting started, dedication to learning how to invest smartly, and the help of a few key tools, taking charge of your financial situation and preparing for your future on your own terms is entirely feasible. Moreover, it’s the superior choice.
We’ll explain why you don’t need a financial advisor in this article, and why handling your investments yourself is typically the preferred choice. First and foremost, we want to go a bit deeper into what financial advisors do – this will help you switch your mindset and realize that you can do it too.
What Is A Financial Advisor & What Do They Do?
A financial advisor is well versed in all things finance. While you may assume their responsibilities start and end with investments, that isn’t always the case. Many financial advisors assist you in financial planning for your future. But, they can also help you prepare for taxes – strategically building an investment strategy that lowers your tax liability along the way. They can also help you with estate planning, life insurance, and more.
But, for the sake of today’s discussion, we will mainly focus on financial advisors from an investment standpoint. After all, this is the reason most people seek out the help of a financial advisor in the first place.
Maybe you just got your first “real job” and you’re finally earning substantial income – you know you’re better off investing it than letting it accumulate in your savings account. Or, perhaps you just received an inheritance – and you want to let that money work for you in the stock market. Whatever the case, your initial thought process may be to seek out help from a qualified financial advisor. And that’s not a bad starting point for many people.
However, when it comes to the best way to invest your money, it is rarely with the help of a financial advisor. Make no mistake, there are plenty of incredible financial advisors out there with a solid track record of success. Unfortunately, though, there are far more instances of financial advisors overpromising and underdelivering than there are instances of financial advisors exceeding expectations.
You Don’t Need A Financial Advisor, Despite What You May Have Been Told
When you look at the grand scheme of things, and financial advisors in general, they seldom make proactive moves but rather encourage dollar-cost averaging. While they may adjust your allocations and customize your investment strategy depending on your tolerance for risk, they frequently miss the mark in terms of delivering ROI. When you consider the fees you pay for what you get, we’d think you would expect more.
If you’ve been working with a financial advisor for a while now, you may already know this. Maybe you came here to read this guide because you’re pondering the decision to cut ties and take matters into your own hands. In our opinion, you’re making the right choice. In fact, it’s very likely your advisor could have saved you tens – if not hundreds – of thousands of dollars over time. There is a tool that can help you invest your money and earn returns at a high rate of success, and your advisor probably isn’t using it. They may not even know it exists.
With just a $70/month subscription (or $20 with a mobile subscription), you can leverage stock forecasting tools to help you eliminate any of the guesswork of investing. Gaining insights into the absolute perfect time to buy, sell, or hold a given investment is invaluable. And, you can find winning opportunities on autopilot. This is software anyone – including you – can use to invest their money with confidence. This is just one of the many reasons why you don’t need a financial advisor. Let’s cover them all in the next section.
Why You Don’t Need A Financial Advisor: X Reasons
More and more people are realizing that financial advisors are not worth it. And you probably get the feeling by now that we are in agreeance with this sentiment. Chances are, you’re starting to lean towards this side of the coin as well. But if not, you will soon – we’re going to break down a few of the main reasons why you don’t need a financial advisor to help you meet your financial goals. First things first – they historically underperform.
Financial Advisors Historically Underperform
The goal when you hire a financial advisor is to see an ROI that doesn’t just cover the fees you’re paying. The ROI has to be high enough to outpace the market, and it has to be high enough to make you feel as if you’re getting good value. As we’ve discussed throughout this topic so far, you can easily invest your own money these days – without any fees. So, how high of a return do you need to see from your financial advisor to justify their fees?
The answer will vary from person to person. What’s worth it to us may not be worth it to you. However, industry studies estimate that financial advisory services can result in a 1.5%-4% portfolio return over the long haul.
When you really think about that return, it’s pretty abysmal. First and foremost, you can say goodbye to 1% of that straight away in fees. And that’s if you’re lucky – some financial services can cost you as much as 1.5% of your AUM (assets under management). You’ll enjoy lower rates as your AUM grows, but small accounts just starting out will have to pay a premium.
Now, let’s factor in the market. Looking at the S&P 500 for the years 1991 to 2020, the average stock market return for the last 30 years is 10.72% (8.29% when adjusted for inflation). Now, factor in those fees. They need to get you 12.5% ROI to break even, and over 12.5% to justify the partnership.
Of course, every financial situation is different. You can certainly earn a solid ROI if you are fortunate enough to find a solid advisor, and market conditions go your way. You can also develop a financial plan that takes on a bit more risk to earn higher returns. However, the overwhelmingly common theme is that financial advisors don’t provide the ROI you need to justify their help. This brings us to our next point…
You Pay Your Advisor Even When Losing Money
It’s always hard to stomach large lump sum payments – and depending on the amount of money you’re investing, you’re going to pay a hefty chunk of change to your advisor each and every year. If you’re investing $100k, that’s at least $1,500 you’re paying annually.
Now, think back to that previous example using the industry average return on portfolios being managed by investors, factoring in the rate of inflation in 2021. You lost money. And yet, your advisor still got paid. Again, this doesn’t make sense. You could have at least saved yourself that $1,500 to cover some of the losses you experienced in unfavorable market conditions. Or, better yet, you could add that $1,500 to profits by managing your investments yourself.
Now, we know what you’re thinking – I don’t know how to invest! But hear us out – managing your own investments in the manner that financial advisors do is actually easier than you may think. Here’s why:
You’re Getting A Cookie-Cutter Financial Plan That You Could Invest In By Yourself!
When you work with the average financial advisor, you’re going to talk over your goals and risk tolerance. At that point, they’ll get into the financial planning aspect of the process. Based on the information you provide them, they’ll likely recommend you a financial product to invest in.
While some advisors still invest your money in individual stocks and assets, it’s far more common that they’ll invest in retail ETFs or investment funds. These are assets that you could go and purchase for yourself on virtually any investment platform. And while the financial professional you hire is responsible for continuing to manage your investments, not a whole lot goes into this.
The point we’re trying to make here is that you’re paying an advisor a whole lot to do a whole little. The common theme you are probably starting to see throughout this discussion is that you can do everything your advisor does for you on your own. At least, when you have the right tools in your arsenal.
These Days, You Can Take Control Of Your Financial Future For Yourself
We keep saying you can do everything your financial advisor does, on your own. And you may be skeptical – there has to be more to it. It can’t be that easy, can it?
Well, actually, it can.
These days, taking control of your financial future and handling your investments yourself is not just feasible – it’s the best way to go about it. After all, the only person you can trust to have your best interests at heart is yourself. Even financial advisors that are held to a fiduciary standard (a legal obligation to put their clients’ best interests before their own) rarely do so. Why line someone elses’ pockets when you can do it yourself with just a bit of education, the right tools, and a few hours a month? Here’s how we recommend you get started:
Begin by learning the basics of preparing for your future. Determine what your financial goals are, and come up with a plan to accomplish them. Here at VectorVest, we have some awesome resources on using the stock market to meet your financial goals. Whether you’re looking for supplemental income in the short term through swing trading strategies, or you want to set yourself up for an easygoing lifestyle by investing early for retirement. Explore our free blog articles to get started on the right foot.
From there, you can invest in free and paid education to gain a more in-depth understanding of how to invest. We have a myriad of courses that will prove invaluable along your journey to financial freedom. These will pay for themselves fast as you start to earn profits all on your own! But to truly see success as an investor, you need to have the right tools in your arsenal – like our stock forecasting software.
This software offers a simple approach to successful investing. Whether you want help picking winning stocks on autopilot for swing trading or uncovering good value stocks that will help you enjoy an early retirement, our intuitive software is here to help. Some of the advantages you’ll have with our software as part of your strategy include:
- Insights into market sentiment at any given time. See how other investors are behaving/feeling about current market conditions.
- A clear buy, sell, or hold recommendation for any stock (see how it works with a free stock analysis).
- All technical indicators are simplified into three easy-to-understand metrics: value, safety, and timing. Pick investments that fit your criteria with the highest VST rating and win more trades!
- Our pre-built searches pull up winning opportunities on autopilot. Whether you’re looking for our top picks for the hottest stocks on any given day or good retirement stocks, we’ve got scanners working around the clock.
With the VectorVest software, you have more power at your fingertips than you’d ever have with the average financial advisor. It’s time to take your financial future into your own hands -and with our help, you’ll outperform the majority of financial advisors out there! Tell your financial advisor to get VectorVest at the very least – trust us, they’ll thank you for the recommendation!
Final Thoughts On Why You Don’t Need A Financial Advisor
As you can see, there are a plethora of reasons why you don’t need a financial advisor. Simply put, they don’t offer good value or ROI compared to what they cost. If you really want to unlock financial freedom, doing it yourself is the way to go. And now that you know it’s not only possible – but easy – you can get started. We’ll be with you along this journey helping you enjoy confidence and a high rate of success – get started today and change your financial future on your own.