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Over the last few weeks, I’ve become very aware of how important a good financial advisor can be.

This past year we’ve had big changes in terms of our finances, with the most visible being selling our townhouse and buying a house closer to downtown.

Overall it’s been a blessing as we have seen certain bills like home association fees being eliminated and utilities being reduced.

As a fixer-upper, we had to make some purchases that have chipped into our savings. Most of these have been planned (with the exceptions of the removing some sick trees) so we’re grateful.

We’ve also had some relatives dealing with health issues that needed attention.

And of course, there’s the market noise like Brexit.

Dealing with Uncertainty and Change

FINANCIAL PLANNERS ADVISOR BEHAVIOR GAP COUPLE MONEY

Even though I know what the rational course is, I’ve been stressed out and second-guessing our strategy. There have been days where I felt off balance and tempted to veer off course.

The good news is that having some money dates to get this off my chest has been helpful as well as seeking out some objective opinions.

This is where I see real value with having a financial advisor – having that voice to keep you focused and seeing the big picture.

I saw a resource that helps both advisors and their clients.

Addressing the Behavior Gap

Last week I had a chance to watch a short, mini-course Carl Richards offers at Behavior Gap for financial advisors.FINANCIAL ADVISORS BEHAVIOR GAP COUPLE MONEY

As both a personal finance writer and someone who has consulted with financial planners and advisors, I believe Carl nails what investors want (and really need).

The best advisors are the ones who teach and help keep you on the plan you’ve created.

Helping investors deal with that uncertainty takes skill and empathy.

Having both the financial knowledge and the emotional intelligence adds tremendous value.

I mean both as an individual and an investor.

Dealing with Emotions and Investing

I recently gave a presentation about the pitfalls that our emotions can lead us towards when it comes to investing.

As much as fees can hurt investment returns, believe or not this was the number one factor for under-performance:

Analysis of the under-performance shows that investor behavior is the number one cause, with fees being the second leading cause.

Source: Dalbar’s 2015 Quantitative Analysis of Investor Behavior

That’s right – we truly are our own enemies.

It’s all too easy to make bad investing mistakes like getting swayed by the noise, trying to time the market, or pulling money out of fear.

Having an advisor who can tackle both the numbers and emotions is worth their cost.

If you’re a financial planner or advisor, please check out Carl’s mini-course.

If you’re an investor like me, make sure your advisor is helping you beyond the how with the calculations and spreadsheets, and get into the why. Not only will your portfolio thank you, so will your future self.

Take the 5 Days to $5K course!

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About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

2 comments comments closed

  1. It’s ridiculous that an advisor will create a plan for a client and then does not work with them to achieve achieve what was laid out in the plan. Even when I’m writing blog posts, at the back of my mind there is a little voice that asks me to check that what I’m writing is actionable by the reader. If it’s too difficult to follow, then I’m not really helping.

    • Yeah, it can be ridiculous and frustrating when an advisor doesn’t help.

      Sometimes it’s a matter of getting better with people skills and learn how to help clients deal with the emotions involved with money.

      A great advisor is not only financially savvy, but is part teacher and counselor. It’s difficult to do and I have a lot of respect for those who help others through that career.

      Then there advisors who don’t have their clients’ best interest. And I have no sympathy for them.