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My wife and I moved to a townhouse. At our former homes, we cut the lawn ourselves and trimmed the bushes, trees and shrubs. We don’t do that work anymore. We deliberately chose a housing option that reduced our manual workload. Now we visit our children and grandchildren instead of working on the lawn. We are freed up from pesky chores and our evenings and weekends are open for the activities we enjoy.
We pay homeowner’s dues and they might seem expensive or unnecessary to some people. A frivolous expense, perhaps, especially if you like doing maintenance or lawn work.
But it is worth every nickel to us.
Are advisors essential?
Did you ever think about who hires an advisor … and why?
People assume that advisors are a nonessential expense. They wrongly believe that knowledgeable people don’t need one and that the only folks hiring advisors are rich or uninformed people.
Yet, that describes almost no one on my client list. My clients are hardworking, smart, knowledgeable and quite well informed. They spend wisely and few of them would pay for anything they don’t need. Indeed, my clients perceive value that I rarely see discussed in the press or media. My list includes active businesspeople, teachers, professionals, union employees and retirees.
Some personal finance media “gurus” whine on (and on and on) about fees, expenses and performance. They seem to offer some credibility because they are – supposedly – unbiased. But that’s just not so. They are biased, and here’s why: They want you to do-it-yourself. Seemingly, they won’t be happy until every adult in America is scrolling CNBC and tweaking their investments daily. They preach the gospel of “long-term” while serving up a weekly (or daily) menu of urgent financial things to do.
Here’s the huge point they miss. Part of what advisors offer is a convenience service. It’s only marginally related to fees, expenses and performance. People pay advisors to do things they’d rather not do themselves. And we also bring a level of expertise that they couldn’t duplicate on their own.
Do you change the oil in your cars? Do you cook every meal at home? Do you grow all your own food and produce? Chances are high that you hire someone to get some of these things done and that the job the people you employ do is better than if you’d done it alone. I’ve enjoyed some remarkable restaurant meals and I promise the oil change guys are faster and better (and way cheaper) than me. Unless you just love changing oil, you know what I say is true.
Doing finance is separate from liking finance
Advisors have work because many savvy people don’t want to do investments and finance! Not because they can’t, or because they don’t have enough information, or because they haven’t seen any good articles about investing. Simply, they don’t want to spend precious leisure time studying stock reports or mutual fund statements.
Should an advisor add performance or stability to your portfolios? Yes. Should they bring economies of scale to limit your total costs or add services beyond those you can perform yourself? Yes. Should they bring experience and expertise beyond what you can know on your own? Again, yes. Any advisor who doesn’t do these things won’t last long in the profession.
Clients should focus on things they really enjoy
Advisors should free you up to focus on the things you really enjoy. They should provide easy-to-understand information so you can reach informed decisions. They should be around to take your phone calls or answer your email. They should be a knowledgeable and wise reference source for your specific circumstance and needs.
It takes a genuine professional to work towards the goals you want. And it is perfectly reasonable to say, “one of those goals is that I don’t want to do this anymore.”
There is an old story, supposedly from Martin Luther King. A young man watched an older woman enter the city bus and start moving down the aisle towards the back. “Hey, didn’t you hear that we don’t have to sit in the back anymore? We marched and won our right to sit anywhere we want.” She shoots him a glare. “I was marching right beside you. Now that we won, I want to sit in the back where there is more room for my packages.”
Choosing an advisor makes sense
Choosing not to do-it-yourself is just fine. That’s a huge point often missed about money.
Just a small percentage of our population actively manages their own money. Still, though, they are a very small group. One knowledgeable source pegs them at just 15% of the population. Here’s my question. Who helps the other 85%? Are they getting the help they need and want?
Dan Danford, CFP® is an advisor in St. Joseph and Kansas City, Missouri. He learned about money from his late father Thad Danford who charged rent on the family lawn mower while Dan cut neighborhood lawns. Danford is also author of Stuck in the Middle: The Mistakes That Jeopardize Your Financial Success and How to Fix Them.
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