{"id":7122,"date":"2016-03-07T12:18:04","date_gmt":"2016-03-07T20:18:04","guid":{"rendered":"http:\/\/blog.paladinregistry.com\/?p=7122"},"modified":"2016-03-07T12:18:04","modified_gmt":"2016-03-07T20:18:04","slug":"how-much-is-a-financial-planner-worth","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/advisors\/how-much-is-a-financial-planner-worth\/","title":{"rendered":"How Much Is a Financial Planner Worth?"},"content":{"rendered":"

According to Wikipedia, financial planning <\/a><\/span><\/strong>is a comprehensive evaluation of an individual’s current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plan.\u00a0 The CFP\u00ae Board of Standards<\/a><\/span><\/strong>\u00a0(Certified Financial Planner) explains financial planning as a six step planning process:<\/p>\n

    \n
  1. Establish and defining the relationship with the client<\/li>\n
  2. Gathering client data<\/li>\n
  3. Analyzing and evaluating the client\u2019s financial status<\/li>\n
  4. Developing and presenting financial planning recommendations<\/li>\n
  5. Implementing the financial planning recommendations<\/li>\n
  6. Monitoring<\/li>\n<\/ol>\n

    As a Certified Financial Planner\u00ae<\/a><\/span><\/strong>, I walk my clients through the 6-step planning process. Since I work with my clients in a fiduciary capacity<\/a><\/span><\/strong>, doing what is right for the client is the cornerstone of our financial planning practice.\u00a0 With that said\u2026.<\/p>\n

    How Much is a Financial Planner Worth?<\/strong><\/p>\n

    If you work with a financial planner you will incur fees\/expenses.\u00a0 Keep in mind, if you do not work with a planner you still incur fees. But is working with a planner worthwhile?<\/p>\n

    Vanguard, which is the world\u2019s largest mutual fund company, is known for catering to \u201cdo it yourself\u201d investors admits that working with a financial advisor pays off.\u00a0 The conclusion of Vanguard\u2019s study, \u201cQuantifying Vanguard Advisor\u2019s Alpha<\/a><\/strong><\/span>\u201d working with an advisor increases client\u2019s investment returns by 3%.<\/p>\n

    This study mentions there are 5 ways financial advisors produce extra returns for their clients.\u00a0 The most significant value-added component is behavioral coaching.\u00a0 Said another way, the discipline and guidance of an advisor produces an extra 1% to 2% in net return.\u00a0 You may be saying 2% is not much.\u00a0 To put it in perspective, 2% of $250,000 is $5,000 and compounded over 5 years is $276,020.20.\u00a0\u00a0If you\u00a0were working with an advisor providing 5% in net return your total value would be $319,070.39 over 5 years.<\/p>\n

    A good advisor emphasizes the importance of behavioral coaching because investors are emotional.\u00a0 In my previous article, \u201cThere is a Better Way! \u2013 Why No One Talks About the Stock Market the Right Way<\/a><\/strong><\/span>\u201d, explains how our tactical portfolio management process is based on time-tested evidence and analysis and not emotions.\u00a0 Too many investors chase returns and make irrational decisions which bring down investment returns.<\/p>\n

    The importance of sticking to a regular investment plan is critical for our clients to achieve their financial goals.\u00a0 If clients focus on the long-term and are consistent to a steady investment plan, their return is increased up to 1.5%.<\/a><\/strong><\/span>\u00a0 Our planning process is built upon the client understanding that they have a plan in place to protect their investment portfolio and grow it at the same time.<\/p>\n

    Vanguard\u2019s study also mentions that another 0.45% can be generated in returns when fees are reduced.\u00a0 Vanguard is known for its low fees and of the 5 major components on how an advisor can improve a client\u2019s financial life fees\/expenses rank 4th<\/sup> on the list.\u00a0 In other words, low fees are not that important in order to achieve an investor\u2019s financial goals.\u00a0 Fees are only an issue in the absence of value.\u00a0 Therefore, investors do not need to make their investment decisions based on fees.\u00a0 Expenses need to be fair and just for the client and there needs to be investment value to the assessed fee.\u00a0 However, the driving force in order for clients to achieve their goals is a disciplined and time tested approach to investment management<\/a><\/span><\/strong>.<\/p>\n

    Vanguard\u2019s study does not address the additional services we offer.\u00a0 For example, I refer clients to a competent CPA\/accountant for tax planning advice and\/or an estate planning attorney for proper legacy planning.\u00a0 How much more value does this bring to a client\u2019s financial situation?\u00a0 Well above 3% stated within Vanguard\u2019s article.\u00a0 The Proverb which states: \u201cWithout counsel plans fail, but with many advisors they succeed\u201d is true to this day.<\/p>\n

    So does it pay to work with a Certified Financial Planner\u00ae?\u00a0 Yes, our advice pays for itself and Vanguard quantified it for us.<\/p>\n

    To learn more about Blake Fambrough and his approach to Financial Planning, view his Paladin Registry profile<\/a><\/span><\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    According to Wikipedia, financial planning is a comprehensive evaluation of an individual’s current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plan.\u00a0 The CFP\u00ae Board of Standards\u00a0(Certified Financial Planner) explains financial planning as a six step planning process: Establish and defining the relationship with the client Gathering client data Analyzing and evaluating the client\u2019s financial status Developing and presenting financial<\/p>\n","protected":false},"author":77,"featured_media":7129,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[325],"tags":[],"class_list":["post-7122","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-advisors"],"yoast_head":"\nHow Much Is a Financial Planner Worth?<\/title>\n<meta name=\"description\" content=\"If you work with a financial planner you will incur fees\/expenses. 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