The greatest value of a great doctor, CPA, mechanic, financial advisor or other expert is not in treating symptoms or responding to problems but in preventing them from happening in the first place. Just as it’s better to never get sick than it is to treat an illness, it’s better to avoid an IRS audit than to have to respond to one.
Likewise, the true value of trusted financial advisors often is not in the problems we solve, but in the ones we prevent altogether.
If you treat your own medical conditions, do your own taxes or try to handle your own wealth management, you won’t have to pay anyone a fee. Yet the actual cost of doing these things yourself — in terms of time, effort, cost, and inadvertent mistakes — can be extremely high.
For example, if you do your own taxes and end up in an audit with a penalty, the expense (and stress) can take a much higher toll on you than paying a CPA to do a proper return. If you visit your medical team regularly, you might be able to prevent a major medical condition from arising, or at least your team is likely to discover a condition early and treat it. If you avoid seeing your doctor, though, because you want to save money up-front, it could cost you dearly later.
Likewise, a trusted financial advisor can help you minimize taxes, reduce volatility, decrease stress and help you grow wealth consistently. Just as preventive medicine is valuable, so is preventive financial management.
It’s hard to see the value of something that “didn’t happen” — the heart attack you never had or the huge market loss you avoided — because you planned ahead. But believe me, the value is priceless!
Mistakes Can Be Costly
According to the 2020 Natixis Global Survey of Financial Professionals, some of the costliest mistakes that investors made in 2020 are as follows:
- Making financial decisions based on emotion
- Trying to time the markets
- Not understanding risk tolerance
- Failing to consider the tax implications of your financial moves
I have written about these common and costly mistakes before, as well as others. Working with our trusted team of advisors can help you avoid the fallout from mistakes like these.
Work with a Team
When selecting a doctor, a CPA or an advisor, their technical expertise should simply be a given. The most important thing, beyond that, is how comfortable you feel with them. Also, does the person you are thinking about hiring work on his or her own or as part of a comprehensive team that can provide a long-term relationship for you; and ultimately future generations, in case that specialist retires, leaves the company or dies?
Your Advisor Team Can Help You Avoid Underperforming the Markets
Individual investors consistently underperform markets. Our team of trusted advisors can help you avoid this all too common, and often extremely costly, mistake.
Dalbar’s annual Quantitative Analysis of Investor Behavior study measures the effects of investor decisions over short and long-time frames. Dalbar has been conducting the study for 27 consecutive years. Since 1984, the study found that 70 percent of average investors underperformed during 10 key periods of market crisis when they took action, such as buying or selling instead of staying the course.
Dalbar’s 27th-annual study, released on March 31, 2021, revealed that many investors performed better during the pandemic than they typically do. However, they still underperformed the general market indices, even in 2020, largely because they panicked when things went down and chased when they were going up.
Looking at 10 periods of market drops between September 1986 and October 2008, the study found that eight of those periods would have produced better returns as soon as one year later if investors had just stayed the course, without taking any action.
A trusted advisor can help you avoid the continual issue of trying to time the market, which is futile, and resulting underperformance.
Our Personal Vision Planning® Process Helps You Stay the Course
We have helped people build and transfer wealth for more than three decades. We have developed and refined a process focused on your personal vision. Ultimately, the true value we add is being here to listen to you, guide you, advise you and help you chart a course, especially through uncertain times. Often, the most important things we do prevent things that would have happened if you had not sought help from us.
Yes, your doctors and your trusted financial advisors will help you try to fix issues that come up, but I encourage you to visit us regularly and follow our guidance, to put you in the best position possible to avoid problems. Our team is a valuable resource to provide solutions, answer questions and, ultimately, help to make your life better.
Being proactive is always wiser than being reactive. Understanding what we can and cannot control, and planning accordingly, are the keys to success. The value a trusted team of advisors brings to you goes far beyond peace of mind. The most important thing they may do is the thing that never happens.
Randy Carver, CRPC®, CDFA®, is the president and founder of Carver Financial Services, Inc., and is also a registered principal with Raymond James Financial Services, Inc. Randy has more than 32 years of experience in the financial services business. Carver Financial Services, Inc. was established in 1990 and is one of the largest independent financial services offices in the country, managing $2 billion in assets for clients globally, as of April 2021. Randy and his team, work with individuals who are in financial transition as a result of divorce, retirement, or the sale of a business. You may reach Randy at randy.carver@raymondjames.com.
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This information does not purport to be a complete description of the securities, markets or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Randy Carver and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors.
Investing involves risk and you may incur a profit or loss regardless of the strategy selected, including diversification and asset allocation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
March 2021
