Why Do I Need to Consider Working with a Financial Advisor?
I sat in class my junior year of college and asked a guest speaker in my personal finance class. My thought process was straightforward: I’m a smart guy, I have the internet at my fingertips, and nothing they do is rocket science. Besides, I knew that advisors rarely beat the markets. I was a firm believer in the power of ETFs as a do-it-yourself method to investing.
A few years later, I get asked the same question by friends, family, and people I have just met. Why do I need a financial advisor? When I ask why they ask, I get the same answers I had, mainly, “I can do it myself.”
The distance from your brain to your heart is 18 inches. That’s a metaphor for the distance between thoughts and emotions, and 18 inches really isn’t a long way. My job is to put myself between the two and not allow a client to make an irrational emotional decision that they know in their head is wrong. For example, here is the S&P 500 Index from 2007-2017:
(Source: Sieron, Arkadiusz, SeekingAlpha.com, Stock Market Bubble and Gold, March 24, 2017)
Big spoiler, the stock market went up after it fell down. This trend has happened after every market correction in history, and it is bound to happen again. Imagine if you just lost a huge percent of your market earnings when the market bottomed out in early 2009, and a financial advisor had told you, “Wait. Don’t sell. Imagine everything at your favorite clothing store just went on sale. Now is when you get your wardrobe for the future.”
Would you have listened? Maybe. Would your heart have told you to sell everything and the kitchen sink and put all your money underneath your mattress forever? Most likely.
When people ask what I do, I tell them I’m a financial advisor. I could be honest and tell them I am an economic behavioral therapist and consultant. I firmly believe what I do has a place in everyone’s life, and when the market falls again, I get to be the one to paint the bigger picture.
The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Please note an investor cannot invest directly in an index.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.
2297453/DOFU 11-2018