When you are approaching retirement, every dollar you have saved becomes incredibly important. Your primary goal is to preserve and grow your wealth to support the lifestyle you envision. Because of this, hiring a financial advisor can sometimes feel counterintuitive. Why spend money on fees when your main objective is to save as much as possible?
The answer comes down to one crucial concept: net value. Advisory fees are double-sided. If the guidance, planning, and strategy you receive generate a net value that outweighs the cost of the fee, then that partnership is working in your favor. However, if that value isn't there, those fees could end up quietly eroding your hard-earned portfolio over time. As an investor, you should always understand exactly what value you are getting in exchange for the fees you pay, and your advisor should be able to clearly communicate it to you.
One area where we see a significant difference in value is how actively a portfolio is managed. A common academic standard in our industry is to rebalance client portfolios on a quarterly basis. But the markets do not wait for the end of the quarter. If a significant economic event happens today, your strategy should be able to pivot today. That is why our firm takes a much more tactical, weekly approach to rebalancing. By staying proactive, we can respond to market shifts as they happen, rather than looking in the rearview mirror months later.
To do this effectively, we also believe in the power of bringing in top-tier intellectual capital, such as a Chartered Financial Analyst (CFA), to handle the deep daily portfolio management. This allows us to focus entirely on you, understanding your specific retirement goals, and ensuring your risk tolerance stays on track.
If you have questions about whether your current financial strategy is providing the net value you deserve as you approach retirement, our team is here to help.
Key Takeaways
- Paying a financial advisor should always be evaluated by the net value they provide; if the value does not exceed the fee, it could erode your portfolio over time.
- The traditional standard of rebalancing portfolios every three months may be too slow to address sudden market movements.
- A proactive, weekly approach to portfolio management allows for more tactical adjustments when economic conditions shift.
- Utilizing specialized experts to manage daily trades allows your financial advisor to spend more time understanding your personal needs and communicating your financial picture.
Fitzwilliams Wealth Management, Inc. is an SEC registered investment advisor. FWM and Fitzwilliams Financial are affiliated companies. Registration does not imply a certain level of skill or training. The information contained herein is for informational purposes only and should not be construed as personalized investment advice, a solicitation, or an offer to buy or sell any security. Individualized investment advice can only be provided after entering into an advisory agreement. Fitzwilliams Wealth Management, Inc. does not provide tax or legal advice. Please consult your tax and/or legal professional regarding your specific situation. Media appearances are for informational purposes only and do not constitute an endorsement. Investing involves risk, including the potential loss of principal.