Why You Shouldn't Do Your Own Investing
- Studies consistently show that investors who use financial advisors (not to be confused with stockbrokers) do better on average than those who do not
- Financial advisors bring discipline to the investment process – a steady hand at the tiller, especially during the euphoria of up markets and the despair of down markets.
- Advisors help formulate a prudent investment strategy to ensure that its targeted return and risk levels are consistent with the client’s objectives and risk tolerance.
- Advisors encourage the difficult rebalancing decisions: Selling the winners and buying the losers (and analyze the tax consequences implicit in this exercise).
- Plancorp invests a significant amount of client assets in institutional-only index-type mutual funds that are generally not available to the retail public. These funds exhibit characteristics that are different from the traditional index funds, and have been shown to produce greater returns over time, in addition to offering an opportunity for greater diversification among asset classes.
- Plancorp’s portfolio designs are based on academic models, with more weighting generally given to those asset classes that have historically produced greater returns.
- Plancorp provides custom reporting that includes quarterly, year to date and since inception performance reports for each account and for all related accounts combined.
- Plancorp holds regular review meetings to keep the client up to date as to how their account is doing, and also to allow for discussion relative to any changes in the client’s investment goals, income requirements, etc.
- Plancorp’s fees for managing the account, combined with the fees charged by the mutual funds that we use, are typically lower in total than an investor would pay if he or she simply went out and bought an average no-load fund on their own (and received none of the services that Plancorp provides its clients).
- In the end, you could do it on your own, but the reality is that you probably wouldn’t. Setting up a plan with the appropriate asset allocation mix based on risk tolerances and return assumptions is one thing, but having the fortitude to stick with it over an extended period of time and through the highs and lows of the market is quite another. Our experience is that it seldom happens without the help of a qualified advisor.
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.