Quarterbacks have help. Do you?


Watching the football games last weekend (and quarterbacks who throw the ball to their receivers - and not the opponents...) got me thinking.

Quarterback coaches and financial advisors are very similar.

Grant me some latitude here. I’m in Chicago where we spend much time talking about bad quarterbacks.

Every quarterback has a minimum of two opponents. The opposing defense who wants to rip his head off and himself. By himself, I’m referring to the mistakes many quarterbacks make in the heat of the moment. Throwing off the wrong foot, holding on to the ball two long or, our favorite here in Chicago, throwing into triple coverage. You get the picture. I don’t need my imagination on this one. I see it in living color every Sunday.

Anyway, a good coach protects the quarterback not only from tricky defenses, but also from unforced errors.

So whose the quarterback of your future? It's YOU!

You’re the quarterback and in the same vein as our football example, you face a ferocious defense (the financial markets) that may seem easy but are not.

Good advisors help their clients understand market risk, diversification and tax efficiency, among other variables, but also save the client from making unforced errors.

A good advisor saves you, from, well, YOU!

From my friends over at Northwest Financial:

Many individual investors simply do not have the time, patience or persistence to deal effectively with their investments over the long term. In addition, there are some common mistakes that individual investors make that a professional advisor can help to overcome, including:

  • Making ad hoc fear-based revisions at the first sign of market weakness

  • Omitting the process of drafting an investment policy statement

  • Emphasizing individual securities rather than the overall portfolio

  • Failing to reevaluate their financial situation at least annually and then revise their investment policy statement

  • Getting caught up in the hype of the market and lose investment focus

  • Chasing the latest investment fads

Wow, sounds about right but is there a way to quantify the help a good advisor provides?

According to a Vanguard study, advisors can add up to 3 percent per year to client returns by helping them allocate assets, rebalance appropriately, and stick with the program when times are tough.

Here’s a chart that summarizes their findings. (Source www.Vanguard.com)

That third point - Behavioral coaching - is not a throwaway. Most people are terrible at investing their money. They zig when they should zag. Buy high and sell low. (I’ve been there. We all have.)

But in my bones, I feel that investment uncertainty is growing despite the euphoria of the post election rally.

From a columnist at Forbes Magazine:

"Lately, I’ve been encouraging investors to think about and address the possibility of lower portfolio returns over the next few years. But how many people will actually do the research and take action? My guess would be not very many. Most of us are simply too busy with the day-to-day to worry about risks that might not show up for a decade or more. Wow, that’s complicated. I'm probably okay. It can wait.”

And there's more:

Looking at Future Portfolio Returns

And this from the USA Today...

2017 investment forecasts: Possibly good, no longer great

Even more worrisome according to Time Magazine - (I’m paraphrasing here...) 81% of investors say expectations for double digit gains going forward are realistic and 54% believe their portfolios will perform better (going forward) than in a year like 2014, when the Standard & Poor’s 500 Index rose by 13%, according to the Natixis survey.

You also have financial gurus like Dave Ramsey suggesting that a bit of mutual fund diversification will get you 12% every year. It’s just not reasonable, if it ever was.

Many outlooks, (once you move past Wall Street’s marketing machine), suggest lower returns going forward, I believe we have entered a time where mistakes will be more costly than ever before. Managing (minimizing) drawdown will be vital, protecting principle even more so. (Read my take on predictions here.)

The elephant in the room is fees. When hiring an advisor, many point to the fees. It’s true, there are fees. (If you’ve seen me you know I’m not doing this for my looks!) Nobody disputes that advisors earn some money for their efforts.

But what’s important to keep in mind is that there are fees in all corners of the investment galaxy. Many 401Ks have high fees. (I hope your plan isn’t with Edward Jones.) Insurance policies have fees. So does nearly every mutual fund. Most people don’t realize it because the fees are baked in before computing the NAV (Net asset Value). What you don’t see/know, can definitely hurt you.

So I like to say, you’re going to pay someone, the question is what are you going to get for it?

At the very least, run your current situation by an advisor for a second opinion. I tell some people they’re just fine the way they are. They like to hear that; I just wish I could say it more often…

That’s just the way it works.

How much are you willing to lose?

Up until recently the investment industry has focused solely on past performance. This past focus is akin to only using your rear view mirror when driving. Our modeling focuses on the future by measuring how your portfolio reacts to different environments. This is like a foggy windshield. It's not absolutely clear, but better than looking behind you! ​We call this portfolio Stress Testing. To learn more click on the picture or here.

Required disclosures: Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and (Strataxa Retirement Advisors, LLC) are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.

Information provided is not intended as tax or legal advice, and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional

Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a fee for assets under management while insurance products pay a commission, which may result in a conflict of interest regarding compensation.


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Darryl Rosen MBA, RICP

Darryl Rosen is the founder of Rose Advisory Group, and operates www.RealRetirementAdvice.com as a way to help others create their ideal retirement. He is obsessed with helping people create safety, simplicity and strength in their financial future. Darryl’s clients enjoy his straight-forward, plain-spoken guidance, strategies to minimize taxes and ability to generate investment returns, while minimizing risk so his clients can sleep at night! Darryl is licensed to provide guidance on securities and insurance solutions and has achieved the highly desired Retirement Income Certified Professional (RICP) designation.

Darryl is the creator of the well-known SECURiMENT™ Retirement Planning Method. A simple to understand and implement planning method that demystifies retirement planning so that people can take action. Visit Rose Advisory Group to learn more! 

Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor.  BCM and (Rose Advisory Group) are independent of each other.   Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Information provided is not intended as tax or legal advice, and should not be relied on as such.  You are encouraged to seek tax or legal advice from an independent professional.