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Research Suggests: Financial Advisors Can Be Worth Every Penny 

The question has become more common each year: in the era of app-based individual investing, are financial advisors really worth it?

Research suggests that people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.¹  Additionally, 79% of those who use a financial advisor report feeling confident in achieving their retirement goals.²
 
A Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.³ 

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SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments. 

We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.

Other than application and licensing fees, SmartAsset did not provide compensation for the aforementioned awards. 

Sources:
1. “Advisor Value”, Voya Financial (2015)
2. Journal of Retirement Study (Winter 2020)
2. Vanguard (Feb. 2019), Putting a Value on Your Value. 

The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results.  Please follow the links to see the methodologies employed in the Vanguard and Journal of Retirement whitepapers. 

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The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha, Feb. 2019”.  Please carefully review the methodologies employed in the Vanguard Whitepaper (https://www.vanguard.com/pdf/ISGQVAA.pdf) The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser. 

These hypothetical numbers are sure to act as the final word, sending Americans flocking to financial advisors in droves, right?

That might be true if they knew where to look, but most Americans are unsure where to begin to search for qualified financial help.

Luckily, we’ve developed a free online tool that matches individuals with up to three screened fiduciary advisors who are eager to serve. It’s fast, easy, and completely free.