The Value of a FInancial Advisor: Perspective

This post was originally written on March 16, 2011, a little over a year ago.  As the title indicates, perspective is important. I hope you find this helpful to consider.

As I sit at my desk, with spring beginning to arrive in Farmington Hills, MI, it is hard not to think about world events and their impact on the financial markets.


The horrific events in Japan, both nature and nuclear, are profoundly sad and scary. The events in the Middle East over the past months may be very positive, resulting in increased democracy and freedom for many, but could result in oil disruptions.

Neither of these series of major events could have been predicted on January 1, as 2011 began. As no one could have predicted these events, no one could have made investment decisions based on these events occurring.

Which leads to one of our basic investment tenets: we focus and plan for our clients, for the long term. While we recognize that there are many issues and problems in our country, and throughout the world, we try to assist our clients by keeping a long term perspective. While the events of today are important, they should not control or even impact your financial goals, which may be decades into the future.

As we plan, we are realistic, but optimistic about the future. Our country, and the world for that matter, has proven to be very resilient, if viewed by years or decades, and not day to day. For any time period you select, challenges were faced. Thus, we structure your portfolio with safe, fixed investments for the short term or to provide a foundation of current cash flow, and with stocks to provide growth for the longer term.

We plan for our clients when we begin to work with them. We develop an Investment Policy with them. Then, at times like this, or during 2008-09, we are here to talk to them, if they desire. That is key. By talking about the financial markets and what is going on in the world, we help our clients to keep a long-term perspective, which really means they are able to keep their long term strategy in place (and not panic). That is key to helping their investment experience to be positive, so they will have the comfort and security to know that we are helping them move toward reaching their financial goals.

From Lottery Tickets to Real FInancial Planning

Except for three lucky lottery ticket holders this weekend, for the rest of us, real financial planning and wealth management is still a very important priority.

Our goal for our clients is to help them achieve a sense of financial comfort and security. For each client, this may mean something very unique and different.  Our objective is to assist them in making good financial decisions, allocating their investments properly and working with them over time, so that they will be able to handle the volatility (the ups and downs) of the stock market.

While winning hundreds of millions of dollars Friday night sounded great, the reality is that your financial success will be the result of a few key decisions that you make over the course of your lifetime.  Note that I did not state many decisions, but a few key decisions.

These key decisions may include:

• Having a proper team of advisers, including a financial advisor and an estate planning attorney.
• The spending decisions you make, particularly on how much to spend on your house, cars and vacations. Are you living within your means and saving money on a regular basis?
• Deciding to stick with an investment plan, or jumping in and out of the stock market, because you are scared or can't handle the ups and downs in the short term. For example, if you got out of the stock market during 2008 or 2009, or during the summer of 2011, those may have seemed liked good decisions at the time. However, they were probably not decisions that in the long run were in your best financial interest. 

Some of the benefits that our clients receive, or they have told us they have received, are:

• Less financially related stress, as they know that they have a good long-term investment plan in place and a team of advisers they can talk to.
• An investment plan that includes minimizing your taxes in a very effective manner.
• A real understanding of the high costs of their investments. When we begin to work with clients, many are very surprised about the true cost of their previous investments, which they were not fully aware of. We can almost always reduce this cost.
• A lot less mail, and thus, less time that they have to spend dealing with their investments.
• Knowing that they have a wealth management firm that has the client's interest as a priority, which comes ahead of the firm's financial interest (we actually have a legal obligation to put the client's interest first, which not all financial advisory firms can say or do).

So as the first quarter of 2012 ends, with the US stock market up a very surprising 12%, and international markets up even more, please take a moment to consider your investment decisions.

Are there any key decisions you could make today, other than buying a lottery ticket, that will have a significant impact on your financial life, 10, 20 or 30 years from now?