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Too _____ for a Financial Advisor?

Updated: Aug 27, 2022


Too young for one? Too old? Have too little in savings? Too financially savvy to pay for one?


I recently came across an interesting survey of Americans about advisors. Here's what caught my eye:

Only 30% of Americans have used a financial advisor. Those who do have advisors are mostly educated and with high-incomes. I can think of many reasons for this: First, a generalized anxiety about money matters prevents those who could use the most help from seeking it. Second, this is likely the result of an industry whose entire model relies on charging a hefty percentage on managed assets (AUM in advisor-speak). Finally, it is quite likely that Americans use a lot of unpaid financial advice of varying quality - books, relatives, and oh, Dave Ramsey. My own opinion is that all of us - even me, an accredited financial advisor - can benefit from having someone look over our shoulders and help navigate difficult scenarios.


Most Americans with an advisor started with one after a life-event - mostly after deaths and divorces. Much like with healthcare, good financial advice works best when received BEFOREHAND. An ounce of prevention, if you will.

42% of Americans think advisors are only for the wealthy, 38% think they can find the same information online. 50% of all respondents thought advisors cost too much. There is a kernel of truth to this. Advisors who charge $500 per hour or 1.5% of managed assets truly are only for the wealthy - and often bad for them too. In today's information-rich world, there is plenty an investor can do to help herself.


Evidence has piled up over decades that active fund managers rarely beat their market benchmarks after fees, it is impossible to consistently win by timing the market, and the constant churn in investor accounts creates a big tax-driven hurdle to investor returns. So, why use an advisor then? What can a GOOD advisor do for you? Help you keep your wits when the market takes a nosedive. The biggest source of individual investor under-performance is trying to time investments. A good advisor can save you many multiples of the fees you pay by simply helping avoid common investor behaviors. Help you design a simple and appropriate portfolio. A good advisor can tailor your investments to your risk profile, while minimizing fees and complexity.


Help you take advantage of the tax code, which remains a bottomless well of complexity - and therefore opportunity. Be it 529 plans for your kids' education, Roth conversions or more sophisticated trusts, there are many ways for an investor to save on taxes. A good advisor can help you navigate this web of complexity. In starting this new venture, I had a choice as to whom to target and how to charge. So, I made three important choices. I chose to be:

Independent: free of pressures to sell products I don't like. Fee-Only: no kickbacks, commissions , so I can be fully transparent with my clients. Flexible: my fee structure allows me to help people at all levels of net-worth Rather than build a transactional practice focused on the wealthy, I chose a relationship-based model that offers great value, and will allow me to help families of all walks of life, and hopefully, over decades. Ultimately, I want to be an advisor for those who were too _________ for a financial advisor.



CAVEATS: This material is intended to be of general interest, not personal financial advice or a recommendation to buy, sell or hold any security or adopt a particular investment strategy. Your circumstances and attitudes toward risk matter, and only an advisor working with you can give you specific advice. All investments carry the risk of loss, including loss of principal. Stock and bond prices can be volatile. Past performance is not an indicator or guarantee of future results. Diversification does not guarantee profit or protect against risk of loss. This material may not be reproduced, distributed or published without prior written permission from Sanjay Pamurthy/Artham Advisors LLC. Data from third party sources quoted here has not independently verified, validated or audited. Although information has been obtained from sources that Artham believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Artham accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.


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