The Need For A Coach: Why Should Someone Hire A Financial Advisor?
The Harvard-Yale football rivalry began in 1875 and Harvard didn’t see the need to hire a coach. As a result, Harvard only won 4 games against Yale over the next 30 years.
In 1908 Harvard decided to hire its first dedicated football a coach. In the next 30 years’ worth of games against Yale, Harvard won 15, tied 3, and lost 11 (No games were held in 1917-1918). Harvard has had a coach ever since.
For those who are serious about improving, a coach provides real value. A coach can see things you cannot either because of their experience, or because of their position as an objective 3rd party. Whether you are a novice or an expert, having a coach can accelerate your progress and help you reach goals.
Want to get great at something? Get a coach. -Dr. Atul Gawande
There are sometimes negative misconceptions when it comes to paying for Financial Coaching. Stop me if you have heard this before: “Why would you pay someone for financial advice? A financial advisor’s fee just cuts into your return. It is simple, just buy some broad market ETFs, max out your contributions, and leave it alone.”
Where to start… first I will be agreeable. Yes! Saving for financial goals does not have to be complicated. While there are a lot of nuances to the words: advice, contributions, max out, and broad market ETF (that would be an Exchange Traded Fund), many savers and investors have had great success managing their own finances.
But just because investing can be done simply, doesn’t mean having a dedicated coach is worthless. After all, playing a football could be considered straightforward as well.
In my experience, when a person chooses to hire a financial advisor, they do so because they want to take their finances seriously. Not because they are incapable of “figuring it out” on their own, but because they want to be rigorous in their decisions and they value having a professional help them work towards goals. They recognize that by leveraging a professional, they can often make better decisions while also freeing up their time to focus on family, work, and hobbies.
Vanguard, the company famous for providing low-cost investing solutions, has publicly proclaimed the value in paying for investment advice. In a 2019 study, Vanguard concluded that a financial advisor may add around 3% net return to a client portfolio. Nearly half of this value (1.5%) was attributed to the coaching an advisor can offer!
Does this mean you have to have a coach to be a successful investor? Of course not. Some people really enjoy self-directed learning and managing their own finances. They find satisfaction in the DIY aspect of going at it alone. That is great. Some people like to remodel their own kitchen too, while others like to hire a contractor. Neither decision is right or wrong.
We provide our clients with coaching and advice that is tailored to their situation. We remind them that anytime they have a question, with a dollar sign attached to it, we encourage them to call us. Not because they are incapable of figuring it out on their own, but because we are their advisor and coach! Not only do we do this every day (all day too!), but we are a 3rd party with a different perspective. We are a sounding board.
And like any good coach, our biggest goal is to see our clients thrive!
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual
All investing involves risk including loss of principal. No strategy assures success or protects against loss.