Comprehensive planners help their clients achieve better outcomes in a variety of ways, including . . . making better investment decisions. . .”
—Wade Pfau, Investor Perspectives
New York, NY (PRWEB) April 17, 2013
Is money spent on professional investment advisors well spent? What is the best way to quantify the value, and what, or who, provides it?
“Investors are likely to encounter challenges along the way as they try to determine who is truly qualified to manage their wealth,” says Steven Abernathy, Chairman and co-founder of The Abernathy Group II Family Office. He notes, “I’ve often said that reviewing a professional investor’s track record of 10 plus years, which has been audited by an independent accounting firm, is the best way to determine if a wealth manager is worth hiring.”
However, contrary to inflated titles, fine clothes, and so-called prestigious companies, wealth managers come in many forms and not all are equal. In his recent post on Investorguide.com, Chuck Jaffe states, “Congress will never be able to mandate an ethical standard that keeps an advisor out of personal financial troubles and stops him from becoming so desperate that he dips into client funds or cooks up a scheme to surreptitiously 'borrow' client money to get through a rough patch.”
Where does this leave diligent investors who do their homework? Brian Luster, CEO and co-founder at the Abernathy Group II Family Office, says, “The keys to determining who are the best people to manage your wealth are their: 1) experience and track record over time; 2) legal fiduciary status; and 3) ability to advise based on sound business judgement integrating client's legal, estate planning, tax, and investment needs. The mix of investments and assets has to be designed around client's needs—not a financial person’s.”
It’s vital for investors to have more clarity about what fees cover—as well as what they don’t. The conclusions to Wade Pfau’s research, explored recently in Advisor Perspectives, are clear: “. . . the investment outcomes of broker-guided portfolios is not a sufficient way to quantify the value provided by the financial planning profession. . .” Broker-guided portfolios have conflicts of interest.
This puts investors on notice: No question is too small. So, with all of the risks of investing, are individuals simply better off taking matters into their own hands? No.
According to Abernathy, the high risks associated with DIY investing mean professional experience remains quite relevant. The average investor does not possess the education, experience, time, nor the true professional's knowledge which puts him, to paraphrase Warren Buffett, "outside his circle of competence." Ideally, advisors are educated, disciplined, committed, experienced individuals who genuinely aim to help clients set and achieve goals. Most people lack both the time and the institutional experience to perform relevant research, so it is wise to seek out true professionals.
While finding the right professional investor takes time, determining the best partner to co-captain one’s financial ship is indeed worthwhile. The goal is to find those who take a lifetime perspective and take into account how today’s investment choices affect every piece of the puzzle—this will take salesmen out of the equation since their livelihood is based upon commissions rather than long-term wealth planning of the investor's hard-earned, after tax money.
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About The Abernathy Group II Family Office:
Steven Abernathy and Brian Luster co-founded The Abernathy Group II Family Office and the country's first Physician Family Office (PFO). The Abernathy Group Family Office sells no products, receives no commissions, and is independent, employee-owned, and governed by its Advisory Board comprised entirely of thought-leading professionals. They are regular contributors to several publications and blogs including The Huffington Post.
The information contained in this press release is provided solely for convenience purposes only and all users thereof should be guided accordingly. The Abernathy Group II does not hold itself out as a legal or tax adviser. If you wish to receive a legal opinion or tax advice on the matter(s) in this report, please contact our offices and we will refer you to an appropriate legal practitioner.