Do You Need a Financial Advisor?

Yes, but not just any financial advisor. You have to be very selective. You need a real financial advisor who provides high quality advice and services for fees. You need an ethical advisor who puts your financial interests first. You need a financial advisor who has specialized knowledge that will help you achieve your financial goals.

You do not need financial advisors who sell investment and insurance products for commission. They are really sales reps. Who would knowingly give a sales rep control of their assets? And, there are no ongoing services because reps are paid to sell. They are not paid to service what they sell.

Are you better off with a financial advisor? It depends on what type of advisor you select. You win if you select a knowledgeable, ethical advisor. You lose if you select a sales rep masquerading as a financial advisor.

Disciplined Investment

Notwithstanding the slick advertisements of the do-it-yourself discount brokers, high quality financial advisors provide a disciplined process for investing your assets in the securities markets. Emotion-backed investing produces disastrous results. You buy when you feel secure (near the top of the market) and you sell when you feel insecure (near the bottom of the market). A disciplined investor would do just the opposite.

Planning Services

Before you invest, you need a comprehensive financial plan that is your roadmap for the future.

  • How much money do you need to retire?
  • How do you pay for high quality college educations for your children?
  • How do you make sure you do not run out of money late in life?

Your plan provides answers to critical financial questions that determine your rate of return objective and tolerance for risk.

Sophisticated Strategies 

As much as people would like to believe it is true, no financial advisor or individual investor has developed an ability to predict the future: Stock prices, interest rates, inflation, etc. The only solution that works is a sophisticated strategy that delivers competitive performance when the markets are going up and minimizes losses when markets are going down. The foundation of this strategy is diversification.

There is a much higher probability that financial advisors can deliver this type of strategy than investors developing one on their own. 


Advisors are paid to deliver competitive performance that is based on your return objectives and risk tolerance. A competitive return, after expenses are deducted, beats the return of your Benchmark (see Paladin Performance Benchmarks) or an index if you own one type of investment.

Risk Management

Risk is losses that are produced by down markets and securities that fail to meet investment analyst expectations. For example, the market as measured by the S&P 500 was down 38.5% in 2008. Your financial advisor’s role is to minimize your risk of large losses like the one that occurred in 2008. You win if you take the same risk as the market, but lose less during inevitable market declines.

The Golden Rule

Select a financial advisor or do the work yourself? The answer lies in the golden rule: It is much easier to learn to select a high quality advisor than it is to learn how to do the advisor’s job yourself.

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