When thinking about retirement planning and how to fund your future, you will inevitably have to address the question of how to invest wisely in order to reach whatever long-term goals you might have.
One of the first things to consider is whether you should hire a financial adviser or forgo professional advice and self-manage your assets. However, your decision shouldn't focus solely on fees or your own investing ability, because the benefit of a financial adviser goes much deeper than simply receiving advice and picking stocks.
Good investment advice is critical in helping you establish a plan for achieving your long-term financial goals, sticking to that plan, and helping you enjoy your life and finances as you go. Different investors will benefit from different financial advisers depending on management styles and communication techniques. It is up to individual investors to weigh the benefits of any particular adviser or firm against the potential costs.
Here we’ll discuss some potential benefits to consider when searching for your ideal financial adviser.
Determining your long-term investment goals is the first step towards developing any sound investment strategy.
Self-managers face many risks when creating their investment plans. It is easy to overly focus on one area at the expense of others, or to allow personal biases to influence the overall portfolio asset allocation. Some self-managers might even neglect to consider crucial factors such as their longer-term cash flow needs, pension planning and portfolio diversification.
The first step in the process should be to thoroughly review your current financial situation. Only once you and your financial planner have taken this step will you be in a position to identify realistic and suitable financial goals, followed by building an investment strategy to maximise your chances of achieving them.
If you are a qualified investor with at least $500,000 in investible assets, Fisher Investments Canada may be able to help you assess your personal circumstances and current investment portfolio to determine whether it is the optimal strategy to achieve your long-term goals.
In defining your long-term investment goals and strategy, here are some key questions to discuss with your financial adviser:
These are basic questions but can have many variables and implications. They should also help drive the initial conversation with your adviser.
Good advisers should always start by asking you to define your long-term goals and potential investment time horizon—how long you’ll need your portfolio to last. This is a crucial, yet frequently underestimated, requirement for goal-setting.
It is too easy to neglect this aspect of your retirement and pension planning. Firms suggesting that standard life expectancy tables should dictate your time horizon frequently fail to understand that these are just averages. For those in good health, the chances of living beyond those average life expectancies are higher, and you may want to consider planning for a potentially-longer time horizon than those tables might suggest. If your financial plan does not help you prepare for a long-enough time horizon, your portfolio could leave you short of money at a time when you need it most.
Furthermore, your investment adviser can help you better understand how your time horizon may extend beyond your own life, particularly if you have a younger spouse or are planning to leave a legacy. Good planning and investment advice can reduce the chances of your portfolio falling short of your time horizon or neglecting to account for the impact of inflation, rising living costs, or unexpected, high-value expenses, such as helping a child or grandchild purchase their first home.
One of the most important benefits a financial adviser can provide is counselling you to help you stick to your long-term strategy and stay on track towards your long-term financial goals.
Too often, self-managers and retail investors get scared by short-term market volatility mixed with fear-inducing headlines. However, good financial advice can help you stay committed to your long-term investment goals while helping you refrain from making emotional and myopic trades. At times, these emotional trades might be ill-timed. For example, when downward short-term volatility strikes, you might fear a larger drop and end up selling securities at a loss only to miss the initial recovery.
These short-sighted investment decisions are not only confined to downward movements in the market—they can also occur during times of sector growth and during a bull market. For example, many self-managers and some investment firms are prone to chasing ‘heat’—buying into a stock or sector that has performed well in the recent past. The most common pitfall of this mistake is that so often, hot sectors or stocks that have outperformed the market in recent years can easily begin to cool down just as you buy in to the craze. A prime example of this mistake might be buying into hot technology stocks in the late 90s just before the ensuing bear market.
If you choose to hire Fisher Investments Canada as your investment manager, you will be provided with a dedicated investment counsellor who can help you stay true to your investment strategy. They can work with you to understand your current situation, long-term goals and behavioural tendencies—helping you avoid emotional investing mistakes.
As well as providing support to help you stay disciplined, working with a good financial adviser provides further benefits. As many self-managing investors have learned, trying to research the full spectrum potential investments—for example, stocks, bonds, exchange-traded funds (ETFs) or mutual funds—can be a real rabbit hole and it is an arduous task for any retail investor. However, by working with a professional investment adviser, you have the peace of mind that the research is being carried out for you in ways you might not be able to or might not have thought of alone.
If you choose to delegate investing research and responsibilities to an adviser, your valuable time is yours to do what matters most: spend time with your family and friends, travel, play golf or tennis, paint or do whatever else you desire.
If you are still interested in investing and want to keep up to date with markets, some investment advisers may host educational client events. At Fisher Investments Canada, client events will allow you to meet with members of the firm, ask any questions you might have and discuss their current market outlook.
By hiring Fisher Investments Canada, your dedicated Investment Counsellor can help you learn more about the market as it relates to your portfolio. This access can prevent you from having to sift through company reports and market analysis on your own time.
At Fisher Investments Canada, we are dedicated to educating investors and helping them start the retirement planning process. Contact us today to speak with one of our qualified professionals or download one of our investing guides to learn more.
Investing in stock markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. Past performance is no guarantee of future returns.