Why You Need an Advisor

April 7, 2015



JRW_WW.jpgRemember the story of the frog in a slowly heated pot of water? He was blissfully unaware that anything was wrong—until the water boiled and it was too late. We don’t like to think of ourselves as frogs, of course, but the story does have something to teach us, especially where our finances are concerned.


Sometimes we can get off track, losing focus on what’s important. Other times, we simply have no way of knowing about something that puts us in harm’s way. Either situation can be avoided by having a good advisor looking out for your interests. This is true regardless of how knowledgeable you are about finance and investments.


A number of years back, I had a mentor. He was a successful business owner, one of the most capable and knowledgeable people I have met, the last person you would think of as the oblivious frog in the pot of water. But when it comes to investing, sometimes the more you know, the more likely you are to be distracted from your core principles by the latest hot tip or fad technique.


In this case it was especially ironic because my mentor had always emphasized to me the futility and danger of anything intended to produce quick riches. So I was surprised when, after not seeing him for about a year, I learned he had found just such a fad that had captured his fancy—and his money. It had to do with timing precious metals markets, but the details aren’t important. The key was that my mentor had lost sight of what he once clearly understood—the importance of managing risk and focusing on long-term growth. He paid the price, and it was an expensive lesson.


The moral of the story? Needing an advisor has nothing to do with how smart you are. In fact, financially savvy clients sometimes need the services of a good advisor more than others. Since they follow markets more closely, they learn about all of the latest trends and techniques that could lure them from the proven path to wealth.


That’s not to say that a lack of knowledge is bliss. I had one client-couple who were very good about saving, but were not especially financially savvy. To keep things simple, they had saved through the 401K at the husband’s work, since they thought his job was the more stable one. The problem I discovered when auditing this set-up was that the plan offered through the wife’s job had some very tax-advantaged options that could greatly benefit the couple’s situation. Pointing this out, I got them to contribute over $50,000 to that plan the next year. They saved some $20,000 in taxes as a result.


So who needs a financial advisor?

  • Those who know a lot about finance
  • Those who know very little about finance
  • Most people in between


That means you! Everyone’s situation is unique, of course, which is another reason to have an advisor, one who takes a 360-degree view of your financial life and folds together all of the aspects to improve your decision making. That’s how we operate at PARTNERSINWEALTH. If you find yourself in a boiling pot of financial worries, let us re-orient the situation so that you will be in control and resting easy. To learn more about us, please contact Jim Waters, CFP®, at 713.964.4028 or jrw@partnersinwealth.com.