Independent Thinking
Working For You.

The Professional Advantage

July 18, 2014

The Professional Advantage

Getting what you pay for…..

Every now and again, someone asks us to explain the benefits of dealing with a financial professional. This issue has been in the news lately, so we thought it might help to go over a few of our answers. We admit some may consider our opinion a little biased, but we think these reasons are as solid as ever. Here are a few of them:

Expert Advice
With many hundreds of billions of dollars circling the globe every day, financial markets are becoming increasingly complex. Given this, it only makes sense that your investments should be fully researched and followed on an ongoing basis by someone with the expertise and professional qualifications to understand both market behaviour and your financial goals. Having the knowledge and spending the time to get it right when you first start a plan helps investors gain confidence and stay the course which pays dividends for a lifetime.

The Do-It-Yourself Pitfalls
Those who invest on their own with a bank or discount broker are forced to rely on their own financial knowledge and more dangerously, their emotions. Research from DALBAR Inc. and numerous others over the past 20 years has shown that individual investors consistently underperform the broad market by a significantly amount.
DALBAR’s latest report released in May of 2014 not only confirms this, but reveals this gap to be especially wide. Over the past 30 years, the U.S. equity market as represented by the S&P 500 has returned 11.11% per year, while individual investors in the U.S. have averaged only 3.69% per year. Why is there such a difference?
The biggest reason is that individual investors tend to trade too often, which comes with two problems. One is that the trades are made at the wrong time – investors tend to buy high and sell low. The other problem is that trading costs tend to eat into returns.

DALBAR reports that the number one thing investors can do to improve performance is to trade less often. This is one of the reasons that once we have recommended a high quality diversified portfolio that is suited to your goals and tolerance for risk, we will generally advise that you don’t make any change. We will only advise a change if your circumstances change OR if there is something happening within the portfolio or industry that needs to be addressed. We will not initiate change in order to appear busy or to generate additional portfolio costs and commissions. Two great quotes from Warren Buffet, arguably the world’s most successful investor, should drive this point home:

“The more you trade, the more you underperform.”
-Warren Buffett’s 2005 Letter to Shareholders

“Forever is a good holding period.”
-Warren Buffet’s 1998 Letter to Shareholders

Value-Added Services
There’s more to financial planning than just investment advice and not all of it is available at a bank or discount brokerage. A financial professional can help formulate specific strategies tailor-made for your situation. They can ensure that tax planning is an integral part of all investment decisions and offer help with insurance and estate planning needs. As an example, it is our experience that many people don’t really understand why they have the amount or type of insurance that they have.

Working with a professional ensures you have a co-ordinated plan, and also helps to keep you informed of changes that may or may not affect you as you move through life.

These are just a few of the advantages of working with a professional advisor. If you’d like to discuss anything mentioned or have any questions on these or other issues, be sure to contact us. As many are already aware, good financial advice is worth its weight in gold….

It is our strong belief that to be successful in reaching your goals it is necessary to have a plan in place and to follow a process. That is, to make your life and financial decisions not by accident but by design.

Remember, successful people ACT towards the future they want!

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Our Clients

Their honesty and customer service is right up there, with the knowledge and recommendations on where investments should be made. When it’s time for a change Tim is always honest with us on where any changes should be made.

Janet McDonald

To me, it is their personalized service. When something happens, you can go in and discuss your options. The whole team knows your plans, listens to your needs, and can help you make adjustments.

Richard Dumoulin

They are very courteous, friendly and find them very professional. They are good at taking care of time sensitive matters and you get a general sense of being taken care of.

Ginny Blair

The fact they take time to discuss with you their knowledge base, they give you all the options then give you their opinion and let YOU make the final decision.

Elisabeth 

Their integrity and 1-on-1 communication skills, always personable. Tim and his team make you feel comfortable no matter how much you are investing.

James