In the information age we live in today, anyone with a computer or cell phone has access to more information than they can possible handle, on a variety of subjects. In fact, even those without these staples can get answers to many of their questions with a visit to the library.
So what is the role of a good advisor who has taken the time to get to know you and your family and the values that are most important to you?
Many believe it is to get them great returns on their investments. While most if not all advisors strive to get as great a return that is possible given their client’s risk tolerance and investment knowledge, it might surprise many of you that they do not actually control the stock market.
All a good advisor can do is to properly explain the risks and rewards associated with whatever investment you are contemplating, hopefully focusing on the downside risks. This way you will not be blind sighted by market corrections that are inevitable every couple years or so.
In fact, if you are of a more conservative nature, you can join the minority of investors who actually” buy low and sell high”, as opposed to the minority who tend to do the exact opposite by buying high and hoping to sell higher, a strategy that has worked wonders this year and has made a lot of people some nice “paper profits”.
Most great advisors cannot make you rich. Only you can do that, by working hard and by being fiscally responsible. An good advisor can keep you from being poor or losing a good portion of your assets through negligence, greed or naiveté. They can help you to develop and stick to a plan of action which should contain contingencies for then things go wrong. That could mean rebalancing funds from some of your winners into the losers, in effect, taking advantage of lower prices and dollar cost averaging.
If you are a business owner (or an incorporated professional) they can suggest a way to have your company pay for your and your spouses’ retirement, at a greater level than is available with a traditional RRSP.
If you own your own home, they can show you a way to leverage the value of your home in order to acquire a million (multi-million) life insurance policy for pennies on the dollar.
If you are living off your investments, they can suggest ways to get a tax holiday on the distributions, and ways for those funds not to effect a clawback of your social insurance benefits. They can also see to it that your distributions become more tax efficient in the form of dividends and capital gains, lowering your tax burden.
If this is not what you are getting from your advisor, demand it or consider a change.