Can Advisors add portfolio value?

Meghan Bergman, CFP®,
Director of Asset Management
August 3rd, 2017 | 10:05 AM

Why do people still seek out Financial Advisors? After all, it’s not like 20 years ago when the internet was in its early stages and investment information wasn’t that easy to obtain. And it’s also not like there are no lower cost alternatives available.

Of course, you may not have the time, resources, experience or inclination to ferret through the voluminous market forecasts and research that are now accessible online. But even if you do, you might take a moment to think about those not so halcyon days when the real estate bubble burst in 2008 and sent us spiraling into recession.

Remember when the Dow dropped 777 points on September 29, 2008 and another 733 points approximately two weeks later? Remember how you almost couldn’t bear to look at your investment portfolio that was declining in value on an almost daily basis?

What did you do? Did you ride out the storm? Or did you throw up your hands in surrender and sell all or most of your stocks in favor of less volatile investments? Did you consult with anyone?

A recent Vanguard report tells an interesting story and emphasizes the value of having a Financial Advisor. Imagine your portfolio was worth $100,000 on October 9, 2007 and was invested 50% in the stocks that comprised the S&P 500 and 50% in bonds that comprised the Barclays US Aggregate Bond Index. Now imagine that when the market bottomed on March 9, 2009, you sold all your stocks in favor of bonds. By March 31, 2014, you would have incurred a loss of $10,000. If you’d exchanged your stock positions for cash, you would have lost even more – $29,000, to be exact. But if you’d simply stayed the course with your balanced portfolio, you would have gained $41,000.


Financial Advisors can help you avoid making reactionary, emotional decisions. There, in a nutshell, is why you need a Financial Advisor, in our opinion. Investors tend to underperform their investments, according to Dalbar, a well-known financial research organization. During the 20 year period ending December 31, 2015, for example, investors in equity mutual funds earned an average annual return of 4.67%. The S&P 500, however, earned 8.19% annually.

The answer lies within ourselves. Without expert guidance, people tend to sell when something has scared them and re-enter the market when they see things improving – in other words, they sell low and buy high, exactly the opposite of what the old investment adage tells you to do.

An experienced Financial Advisor can help you develop an appropriate asset allocation, rebalance it periodically and focus on your long-term goals, instead of day-to-day market fluctuations. By doing so, you might be able to keep a lid on the emotions that all too often can sabotage your investment progress.

The term wealth management has grown increasingly popular over the past decade, and if your Financial Advisor embraces this discipline, it means that he or she can help you develop strategies that include investing but also encompass other aspects of your financial life.

With a comprehensive wealth management plan, for example, your Financial Advisor can help you prepare for objectives like retirement or education expenses, plan your estate, use debt wisely and protect your family from long-term care and other unforeseen expenses. Moreover, he or she can help you develop strategies for each of your objectives that work in coordination, not in conflict, with each other. A gift to a family member, for example, might not trigger tax consequences down the road. Or your efforts to care for an aging parent won’t unwittingly hamper your own retirement plans.

Can you actually quantify the value of working with a professional Financial Advisor? Vanguard researchclaims that an advisor not only adds peace of mind, but possibly about 3% of value in net portfolio returns over time. Advisors who do this are actively involved in portfolio construction, such as asset allocation for diversification, asset location for tax strategies, as well as wealth management and behavioral guidance to adhere to a financial plan.


Your financial advisor is there to counsel you, listen to your concerns, develop your financial plan and guide you on the right path. Throughout the course of your relationship, your advisor works with you to add value. Quantifying that value is not an exact science. But, we do affirm the value of having knowledge and experience on your side to help you navigate your financial life, particularly in today’s complex investing, tax and legislative environment.

To learn more or speak directly with a Lenox Advisor, click here to contact us.

1 Francis M. Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, and Yan Zilbering, 2014. Putting a value on your value: Quantifying Vanguard Advisor’s Alpha. Valley Forge, Pa.: The Vanguard Group. Securities, investment advisory and financial planning services offered through qualified registered representatives of MML Investors Services, LLC, 530 Fifth Avenue, 14th Floor, New York, NY 10036, 212.536.6000. Fee based financial planning services are offered through Lenox Advisors, Inc., a registered Investment Advisory Firm, and are not offered or sponsored by MML Investors Services, LLC. Lenox Advisors, Inc. is not a subsidiary of or affiliated with MML Investors Services, LLC. Lenox Advisors, Inc. is a wholly owned subsidiary of NFP Corp. NFP is not an affiliate or subsidiary of MML Investors Services, LLC. CRN201906-213293 L