The Value of Working with a Financial Advisor

Seeking help with managing 401(k) investments has been shown to be beneficial. A study by Financial Engines and AON Hewitt found that participants who sought help, either through a pre-constructed portfolio, an advisor managed portfolio, or online advice had more positive performance than participants who did not seek help.

The annual investment performance gap between Help Participants and Non-Help Participants was 3.32%, net of fees. For a 45-year old, this could translate to 79% more wealth at age 65.

“Help in Defined Contribution Plans: 2006 to 2012” Financial Engines and AON Hewitt (2014)

Vanguard’s research** found that independent financial advisors provided greater than 3% average additional portfolio return. There study dissected the components of the value added as follows:

Portfolio Management (1.2% of added value)

Asset Allocation

Asset Location

Appropriate risk levels with portfolios

Wealth Management (1.0% of added value)

Clarifying overall financial goals and integrating with financial plan

Behavioral and Emotional Coaching (1.5% of added value)

Sense of well being

Avoiding emotional decisions

Vanguard, February 2019, Francis M. Kinniry Jr., et al."Putting a Value on Your Value:Quantifying Vanguard Advisor’s Alpha.”

Personal financial advisors can provide the expertise, financial guidance and personal relationship that may lead to a high level of comfort that you will achieve your retirement goals.

Having your financial advisor involved in the process helps to ensure that the 401(k), or other plan type, is working in conjunction with other components of your comprehensive wealth and retirement strategy.

Ask your financial advisor to team with Retirement Management Systems – a specialist in the strategic management of defined contribution accounts, such as your 401(k), 403(b) or other workplace savings plan.