According to Fidelity's Q3 2023 retirement analysis, approximately 12% of 401(k) participants and 9% of IRA participants have reached or exceeded the $1 million mark. These numbers fluctuate with market conditions and may not account for those who hold wealth in non-retirement accounts. According to Vanguard's Advisor's Alpha Study, working with a financial advisor can result in approximately 3% higher net returns annually, here are the benefits of partnering with a financial advisor and how to find the right one near you in minutes.
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BENEFITS TO HAVING A FINANCIAL ADVISOR
1. Personalized Financial Planning
A financial advisor offers tailored strategies based on your unique situation, whether you're saving for retirement, planning for education, or looking to purchase a home. In fact, 76% of individuals believe they would benefit from a financial advisor's assistance when making major financial decisions, like buying a home, according to a World Metrics report. This personalized approach ensures that your plan is designed to help you achieve your specific goals in the most efficient way possible.
2. Expert Knowledge and Insights
Financial advisors bring valuable expertise in areas like market trends, tax laws, and investment strategies. They help you navigate the complexities of wealth management and avoid common mistakes. Research shows that working with a financial advisor can add about 3% in net returns to your investments annually, according to Vanguard’s Advisor’s Alpha Study[1]. This boost comes from their experience in asset allocation, rebalancing, and behavioral coaching, which ensures your investments remain aligned with your financial goals.
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3. Accountability and Discipline
Staying disciplined in your financial plan can be difficult, especially in times of market volatility. Financial advisors act as coaches, helping you stay on track and avoid emotional decision-making. A study from World Metrics found that 84% of financial advisors successfully retained clients during market downturns. This highlights their role in providing stability and guidance during uncertain times, helping you maintain a long-term perspective.
4. Risk Management and Diversification
Advisors help you manage risk through proper diversification and asset allocation. They also provide advice on insurance and estate planning, protecting your wealth from unforeseen events. According to World Metrics, 80% of individuals who work with a financial advisor feel better prepared for retirement. This is a testament to how advisors can help safeguard your future by minimizing risks and ensuring you're prepared for any challenges ahead.
5. Peace of Mind and Confidence
Working with a financial advisor provides peace of mind, knowing that a professional is managing your financial future. Advisors help reduce the stress of complex financial decisions, and their guidance fosters confidence in your investment strategy. A survey from CIRANO showed that 61% of advised investors strongly agreed that their advisor had a positive impact on their investment returns. This confidence comes from knowing that your finances are in expert hands, allowing you to focus on other aspects of life.
In summary, working with a financial advisor offers personalized planning, expert advice, accountability, risk management, and peace of mind. These benefits not only improve your financial outcomes but also ensure that you stay on track to achieve your long-term goals.
Take Action: Locate a financial advisor near you, for free.
[1]Assuming 5% annualized growth of $500k portfolio vs 8% annualized growth of advisor managed portfolio over 25 years.
The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”. Please carefully review the methodologies employed in the Vanguard Whitepaper. The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser.
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*Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications, including Zacks, The Nest and eHow. She is not a licensed financial adviser and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes that the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.