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    Retirement Planning | 3 min read

    6 Ways a Wealth Advisor Delivers Value to Your Portfolio

    No matter which sports you follow, your favorite winning team no doubt owes much of its success to its coach's leadership and decisions. It's similar in the wealth management world: your investments and returns are far more likely to be successful if your wealth advisor functions as your knowledgeable and trustworthy coach, leading your financial team and creating your investments playbook.

    Just this year, the investment firm Vanguard conducted an extensive study about the value a wealth advisor brings to investors. Vanguard found that on average, employing a wealth advisor brings investors returns that are three percentage points higher than those same investors would experience without an advisor. The three percentage points are enjoyed yearly, delivering even greater compound returns over the years. When you think about the overall value of your portfolio, three percentage points in higher returns each year can really add up!

    How Your Wealth Advisor Brings Value to Your Portfolio

    Now that we know to expect about three percentage points in additional portfolio value when working with a wealth advisor, the next question is . . . how does your wealth advisor deliver that value? Here is a list of six ways a good wealth advisor brings value to your portfolio. Your wealth advisor must master these functions to be trusted with your money management and effectively lead your financial team.

    1. Financial leadership and coaching experience

    Your wealth advisor need not have coaching experience in the sports world, but knowledge of leading a financial team is crucial. Look to your wealth advisor to coordinate and oversee the financial services of your attorney, accountant, business advisors, insurance representatives, and bankers. Ensuring all team members are on the same page will maximize your chance of meeting your goals.

    Your wealth advisor is also a good source for finding names of other reputable financial professionals and related products, services, and solutions. Enlist help from your wealth advisor's network anytime you need insurance, banking, mortgage, legal, or accounting work performed.

    2. Financial planning

    This one's basic—your wealth advisor must work with you and your team to create financial plans that address how you'll fund your business and personal goals. Different goals necessitate different timetables, and your advisor must know how to plan for varied goals. For example, if you're saving for your retirement in 20 years and children's college in five years, your advisor must create separate plans and investments to save for both goals.

    Also, your wealth advisor's financial plans must account for your individual risk tolerance (your comfort with the levels of risk in different investments). Even if you normally throw caution to the wind, your advisor must guide you in a prudent plan and course of action. Likewise, if you're naturally very conservative, your advisor must respect your feelings while advocating for some riskier investments that could lead to higher returns.

    3. Investing

    Your financial plan doesn't mean much if your wealth advisor isn't investing your funds in accordance with those plans. Your advisor should offer a wide range of investments from multiple providers, to ensure optimal growth and diversification. While you'll likely wish to make the ultimate call on investments, your advisor should recommend a selection that best matches your needs and objectives.

    In addition, your wealth advisor must monitor your investments and adjust them as needed in order to keep them working toward meeting your goals.

    4. Tax minimization

    A penny saved is actually more than a penny earned if you can avoid paying full taxes. A knowledgeable wealth advisor will help you pay less tax in two ways:

    • Advising you to choose tax-efficient and tax-advantaged investment options
    • Guiding you in the right order to withdraw investments so you'll pay the least in taxes

    5. Cost minimization

    Just like with taxes, the less you pay in fees, the more money you can put toward growing your portfolio. Your advisor should treat your money like his or her own, taking care to recommend investments with low fees whenever possible.

    6. Discipline

    Steady guidance is the most valuable aspect of your wealth advisor. Humans are notorious for short attention spans and a wish for instant gratification. Unfortunately, when an investment experiences an inevitable dip in returns, those human traits lead many people to panic and sell their investments at the worst possible time, when prices are low. Investing requires a long-term view, unemotional analysis of returns, and the ability to thoughtfully weigh all the options before acting. A good wealth advisor will calmly oversee investments through their rises and falls, choose investments impartially, and avoid allowing emotions to lead to the rookie mistake of buying high and selling low.

    We all want to be part of a winning team. To ensure your financial team is successful, make sure your wealth advisor has the necessary skills to lead your team properly. For help finding a wealth advisor with expertise in leading a team and directing investments, meet the SWBC Wealth Management team.

    Member SIPC & FINRA. Advisory services offered through SWBC Investment Company, a Registered Investment Advisor.

    Not for redistribution—SWBC may from time to time publish content in this blog and/or on this site that has been created by affiliated or unaffiliated contributors. These contributors may include SWBC employees, other financial advisors, third-party authors who are paid a fee by SWBC, or other parties. The content of such posts does not necessarily represent the actual views or opinions of SWBC or any of its officers, directors, or employees. The opinions expressed by guest bloggers and/or blog interviewees are strictly their own and do not necessarily represent those of SWBC. The information provided on this site is for general information only, and SWBC cannot and does not guarantee the accuracy, validity, timeliness or completeness of any information contained on this site. None of the information on this site, nor any opinion contained in any blog post or other content on this site, constitutes a solicitation or offer by SWBC or its affiliates to buy or sell any securities, futures, options or other financial instruments. Nothing on this site constitutes any investment advice or service. Financial advisory services are provided only to investors who become SWBC clients.

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