Why Hire Us? Value Added Advice

Three recent studies found that working with a financial professional can result in higher returns, potentially lower personal stress and producer better after-tax results. Having a plan for your retirement goals along with a monthly income plan can reduce anxiety. 

1. Industry studies estimate that professional financial advice can add between 1.5% and 4% to portfolio returns over the long term, depending on the time period and how returns are calculated.*1

2. The American Psychological Association has published a great report on how having a financial plan reduces stress. https://www.apa.org/helpcenter/holiday-stress-finances   

We find that many of our clients feel much more secure about their financial future after working with us. As we plan for the future and stress test our plans, our clients have a clear frame of mind about how much they are saving and/or spending for retirement. 

3. Taxes are the single largest drag on performance for investors over the long term. *2  The value of tax management and other techniques may shift over time in response to market and client specific factors, but our combined decades of expertise indicate that a comprehensive active tax management strategy can improve after-tax returns by 1% to 2% compared to a passive, tax oblivious investment. *3

Above and beyond the numbers, we are really fun to work with!

*1  Value of advice sources: Envestnet, Capital Sigma: The Return on AdviceOpens in a new window (estimates advisor value add at an average of 3% per year), 2016; Russell Investments, 2017 Value of a Financial Advisor UpdateOpens in a new window estimates value add at more than 4% per year); Vanguard, Putting a Value on Your Value: Quantifying Vanguard Advisor's AlphaOpens in a new window® 2016, (estimates lifetime value add at an average of 3%); Morningstar Investment Management, The Value of a Gamma-Efficient PortfolioOpens in a new window, 2017, (estimates value add for a subset of the service identified in this paper at an average of 1.5% per year). The methodologies for these studies vary greatly. In the Envestnet and Russell studies, the paper sought to identify the absolute value of a set of services, while the Vanguard and Morningstar studies compared expected impact of advisor practices to a hypothetical base case scenario. Please follow the links above to see important differences in the methodologies of these various studies.

*2  Arnott, R; Berkin, A; Bouchey, P. “Is Your Alpha Big Enough to Cover Its Taxes? Revisited.” Investments & Wealth Monitor, January/February 2011.

*3   Bouchey, P; Santodomingo, R; Sireklove, J. “Tax-Efficient Investing: Tactics and Strategies,” Investments & Wealth Monitor, January/February 2015.

© 2019 Promontory Financial Planning. The material provided is for general information, and should not be considered a solicitation for the purchase or sale of any security.

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