This article will be somewhat biased given the fact that I am a financial advisor.  Having said that, I truly believe if you can find a competent and trustworthy financial advisor, they can be worth their weight in gold.

Many people mistake investment planning for financial planning. Investment planning is just one component of overall financial planning.  A truly holistic financial planner can:

  • Help you to determine if and when you can retire
  • Determine what you need to earn to help maintain your lifestyle during retirement
  • Create a plan to help reduce taxes
  • Determine the best sequence for liquidating assets in retirement
  • Potentially protect your assets from lawsuits, divorce and medical costs
  • Show you how to sell assets and give you strategies for reducing taxable income
  • Help you maximize your Social Security benefit
  • Help minimize losses and volatility in your investment portfolio
  • Show you how to best pay for college
  • Help you minimize estate taxes
  • Determine how to best give assets to charity

I do financial planning full time with a vast network of specialists that support me in monitoring and implementing plans for my clients.  There is no way I could do this on my own even though I have had extensive education and have been working in the field for 30 years.  Even if someone is trained in all of these areas, I maintain that it is very difficult to effectively do your own planning.

One of the reasons for this is that we all have blind spots.  A blind spot could be conclusions made about a financial product or strategy that is based upon erroneous information or past experience.  It could come from not being aware of the risks you are taking and exposing your family to.  It could also be due to emotions such as fear or greed.  Controlling emotions as it relates to an investment portfolio during turbulent times is very hard to do.  Nobel laureate Robert J. Shiller won the prize in economic sciences in October for his work suggesting that the markets are largely driven by human psychology.  Speaking recently at a conference, Mr. Shiller went so far as to suggest that professional financial advice should be made available to those without the resources to pay for it, through a Medicaid-type approach.  “People make better decisions with financial advisors.” Mr. Shiller said.

I can’t tell you how many people I have seen managing their own financial affairs that felt they knew what they were doing, but lost significant amounts of money.  Most individual investors do such a poor job managing their own portfolios that they end up with only half of the profits they could have made.  This is not just my opinion.  It is an unfortunate fact demonstrated by studies from Dalbar, which, according to their website, is the nation’s leading financial services research firm.  They estimate that the typical individual equity investor earned only 4.25% per year, despite the S&P 500 that generated returns of 8.21% during the same period.  That is a difference of almost $40,000 a year on a $1,000,000 portfolio.  As the Dalbar study stated, “Fear cultivated from previous years caused investors to sell low while short-term rallies tempted investors to buy high.  While investors attempted to maximize returns by guessing right, they in fact guessed wrong.”

Working with a financial advisor can help you avoid the blind spots and emotional pitfalls.  They can provide you with a second opinion and help you meet your investment goals. An advisor is able to not only help you build an investment portfolio that helps minimize taxes and volatility, they can also expose you to investment products/managers that you would not be able to access on your own.  A good advisor can coordinate all aspects of your financial plan, coordinating with your accountant, lawyer or other advisors.  A good advisor will meet with you on a regular basis to monitor the plan and adjust as the economic environment and your personal situation changes.  The bottom line is that a good competent financial advisor can help you achieve YOUR goals and keep you on track.  While many people avoid working with a financial advisor because of the presumed cost, hiring a trustworthy, qualified advisor can actually be the best investment you make.

~Bruce Horowitz


Skinner, Liz. “Shiller: Everyone Needs an Adviser”. Investment News. December 9-13, 2013                                                                                                                                           

McGugan, Ian, “Three Reasons a Monkey is a Better Investor than You”. The Globe.  August 29, 2013.

Dalbar, Research & Communications Division, “2013 QAIB, Quantitative Analysis of Investor Behavior”. April 2013.


STANDARD COMPLIANCE DISCLOSURE: Bruce Horowitz is a Registered Representative with/and offers Securities and Advisory Services through Commonwealth Financial Network , Member FINRA/SIPC, a Registered Investment Adviser. CA Insurance License # 0B66129. Innovative Wealth Strategists is located at 6767 Forest Lawn Drive, Suite 120, Los Angeles, CA 90068.  This communication is strictly intended for individuals residing in the states of AK,CA,CO,CT,FL,HI,NV,TN. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services. Please review our Terms of Use here: http://www.commonwealth.com/termsofuse.html

IMPORTANT NOTE: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at info@iwstrategists.com.