Travis Russell

Travis Russell, CFP®

Travis employs many of the disciplines of success that he learned as a Division 1 hockey player – namely, persistence, practice, and a having passion for what you do – to his role as Principal and Client Advisor.

In my last article, I took a look at how financial advisors are compensated, what types of fees they earn, and what hidden fees to look out for.

Besides knowing what you can expect to pay for financial advice, here at Glassman Wealth Services we are often asked, “What services can we expect to receive from our financial advisor?” It’s a valid question since the types of services offered and the level of expertise can vary greatly from one financial advisor to the next. The answers will determine if your financial advisor is truly worth the money.

In this article, I’ll review the various services you can expect from some of the top financial advisors:

1. Access to Investment Expertise and Sophisticated Strategies:

Investment Advisors or Financial Planners may offer a variety of services that are included in their advisory fee. Investment management, asset allocation, asset location, estate planning, or tax planning are just some of the services they may provide that can add enormous value.

Many advisors have access to top-notch investment teams/funds who help drive performance for their clients. Keep in mind that there are literally thousands of investment choices and tens-of-thousands of potential combinations to construct a well-diversified portfolio, so it’s important to ask your advisor how they are selecting the investments they recommend.

Many strategies and investment management tools are just too complicated for the average investor to do on their own. Asset location is a great example of this. A good financial advisor can use asset location to create greater tax savings for a client. Sometimes the results more than offset the advisors fee. Not sure what asset location is? I explain The Best Way to Minimize Taxes With Asset Location in this article.

2. The Value of an Objective Sounding Board:

Did you panic during 2008 and sell all of your stocks? Even worse, did you get overconfident in 2006 and take too much risk and pay for it in 2008. The value that a good advisor can add by just talking their clients through those difficult times can be worth years of retirement income.

3. Finding Financial Opportunities for Clients:

Outside of investment strategies and advice, many top financial advisors collaborate with their clients’ estate planning attorneys and accountants to solve issues collectively. Our own experience shows that a unified planning process leads to better results for our clients. Here are just a couple of examples where collaboration really benefited the client:

  • Estate Planning strategies: Did your advisor suggest an estate planning technique that would “freeze” your estate and move assets to the next generation without using your lifetime gift exemption? If they had suggested a GRAT (Grantor Retained Annuity Trust) two years ago and invested the funds in the S&P 500, you would have been able to move several hundred thousand dollars of assets to a trust outside of your estate. If not, those assets may have been subject to estate tax, and you can estimate 50% would be paid directly to the IRS. You can expect more information on GRATS and other estate planning vehicles in future articles.I had the benefit spending several years working for Steve Lockshin, current Chairman of Convergent Wealth Advisors and founder of Advice Period. He was a strong advocate that good estate planning beats good investment management; something I continue to believe as I work with clients at Glassman Wealth Services. Estate planning value won’t be seen in your annual return, but can easily be quantified.
  • Tax Planning: Tax planning is another area that an advisor can add tremendous value. As an example, we recently worked with one of our clients who had large business losses that reduced their taxable income to zero. Instead of just celebrating that they wouldn’t need to pay taxes, we worked with their accountant to calculate how much of their IRAs could be converted to a Roth IRA without paying any taxes. Why?This strategy allowed us to move assets from their traditional IRA to a Roth IRA at an effective rate of 0%. That single move could save tens-of-thousands of dollars when compared to the same conversion next year when the client is in a higher tax bracket again. This client is also nearing age 70, so they will no longer need to take required minimum distributions from their Roth IRA (just another bonus!).

4. Setting Expectations from the Beginning:

Since these services can vary from one financial advisor to the next, you should always ask the following questions:

  1. What services should I expect to receive from the advisor and their staff?
  2. How often will I hear from you to discuss my portfolio?
  3. Are you available should I call with specific financial questions?
  4. Will you work with my estate planning attorney and accountant on issues that affect my financial goals?

If you’re searching for a financial advisor or planner, then I recommend you read our 6 Steps to Finding the Best Financial Advisor.

So, Are Financial Advisors Truly Worth the Money?

Paying for investment advice is not for everyone. Many people will continue to manage their family’s portfolio and do very well. And others will make decisions that can have devastating effects on their family’s finances. We’ve seen both.

For those that do employ a financial advisor, make sure you understand how the advisor is compensated and push them to justify their value. As I have pointed out, they should prove their value time and again in many ways. If they do, you won’t have to question their value. You’ll know what it is by how peacefully you sleep at night.

How much would you pay for that?

Do you have a story where your financial advisor proved their worth to you? I’d love to hear about it.

Ready to get started?

Connect with a Glassman Wealth advisor today to continue the conversation.