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This is an Ideal Time to Have a Financial Advisor

Someone once said you cannot predict disasters and market downturns. That’s true. At Hefren-Tillotson, we cannot and will not predict anything – but we can plan for them. In fact, we do it all the time because we know how to handle choppy markets.

By developing creative solutions specifically for an ever-changing environment, we believe you should always be prepared for what might lie ahead. Specifically, we do it with MASTERPLAN®, an approach you can count on for the next 100 years. This comprehensive plan will see you through periods of uncertainty based on eventualities we built into them.

Are You a DIYer or an INPHer?

Sir Winston Churchill said, “Those who fail to learn from history are doomed to repeat it.” There is no point in rehashing the major events of 2020 here, but if you have experienced a feeling of helplessness with your investments, this is an ideal time to regain control.

If you are a do-it-yourselfer and feel confident making your own financial decisions, more power to you. And if what you were doing were good I would tell you. My fear is your finding out two years later that what you were doing was bad. You might not recover from that, which is one reason why now is the best time to be working with an advisor.

Know who you are investing for and the timeframe. If you are an in-need-of-professional-help type, a financial advisor or planner will outline where you are today, where you are trying to go, and when you want to get there. At Hefren-Tillotson, we set a path for you to achieve your financial goals so that we don’t have to watch the market every day.

I don’t think I’ve ever met anybody that we couldn’t help in one way or another in 36 years.

Various studies show that working with a financial advisor may add 3 percent per year to your return. Think about this too: a financial advisor is a sensible addition to the team you might already have – an accountant, an insurance agent, and an attorney.

It’s a Journey Worth Taking

Meeting with someone you feel you can trust and be comfortable talking with is the first step toward preparing yourself for a comfortable retirement. That’s the end game, isn’t it? And so the point is to make sure you are saving and investing sufficiently. We often show prospective clients the bucket approach to investing, which explains how we use short-term money, intermediate money and long-term money.

I often think back to a longstanding client, who has since passed on, and he would say, “You know, Craig, it’s the things you talked me out of doing that have been the most valuable.”

Education is important to us here at Hefren-Tillotson. We recently showed one client our growth and value positions for 2020. Growth was up 30%, and value was flat, or down a little. He asked, “So we’re going to sell this value and buy more of the growth?”

“No. Actually, we’re going to take some of the money out of the growth and pick up a little more of the value to even it up again,” I said. 

Properly managing your investment portfolio and making prudent financial decisions takes the skill and effort of a professional financial advisor or financial planner. We always strive to be better. A financial plan is designed to cover all aspects of your financial life. Over time, you want your assets to be protected while also increasing in value.

Playing it Cool and Careful Will Pay Off

The markets tend to lead people. Certainly, COVID-19 has made it much more challenging to meet with a financial advisor. I say this because some people have said, “Well, let’s wait on our investing until this is over.” The market loathes uncertainty, and here we are, many months later, and the pandemic, unemployment and business closings still hang over us. Looking at what’s happened in the markets. Has it been to your advantage to wait?

I have a friend who is a financial advisor and is trying to tell us how to “play” this COVID rebound. I told him that is not investing. Besides, that is not what we do. I wouldn’t be good at it and I won’t do it. We make informed decisions, not reactionary ones.

For do-it-yourselfers, I tell them to get a referral from a friend and start working with an advisor now. In fairness, many do-it-yourselfers know what they’re doing to a certain point. But investing for accumulation, planning for retirement distribution, controlling your taxes, creating an estate plan and a legacy are important components of achieving success.

With this couple we work with, we manage half and he manages half. Jim loves following the market and is good at it too. He buys individual stocks and follows them. However, Leslie has often said, “If anything happened to Jim, I wouldn’t have any idea what to do.” We know what to do. But ask yourself if you have you taken care of your spouse or your family. Would you ever want someone you care about to be in a position of not knowing what to do or whom to trust?

Mary and John, who were not clients, invested in bank preferred stocks. Before he died, in 2008, John made the calls with the stockbroker. And then, the banks went under. Their $1.1 million account dwindled to $300,000. And it wasn’t coming back. Mary was left hanging with investments she didn’t know anything about and no one to talk to about them. Trouble never comes from where you’re looking, does it? This should have never happened. There was no guidance. Luckily, Mary was referred to me to help sort it all out.

What “Trusted Financial Guidance” Really Means

To me, it simply means, people don’t have to worry. Mary found peace of mind in knowing that we would take care of things. When I think about clients that weren’t worried this year and said, “That’s why we have you,” they stayed the course. They didn’t sell out in March taking a 20% loss. Financial advisors prevent you from selling things at bad prices. Know what you control and what you don’t control. You can’t always focus on beating the S&P in good years. Instead, you can focus on behavior, time, cost and risk.

Hefren-Tillotson clients  were advised not to panic because we planned for this. We didn’t know what would cause it, we didn’t know when it would happen, but we were ready for it. It is important for every financial advisor to know his or her clients’ needs as well as their cash flow needs.

What has worked with most people is our going back to: “Look, we’re set up for this; we have money for this year’s income needs, and next year’s, and the year after that. The money we have in stocks is our long-term money.”

Invest in Yourself and Your Success

With so much information available online, people generally feel they can do it themselves.

Until they realize they are too busy. And when they realize there is a cost, they think it will be expensive and only for the wealthy, completely overlooking the value of receiving qualified financial advice from a experienced professional.

I think that was where Vanguard got it when they found the average investor in their S&P 500 Index fund earned significantly less than the fund returned because of buying and selling at the wrong times. They also found investors who worked with an advisor earned quite a bit more.

This reminds me of someone who was pushing back about our fee. I said, “If you believed in your heart that working with a financial advisor would create a better result for you, would you care how much it cost to get that better result? He said no. So I said, “Let’s talk about that, and about your methodology and ours.”

At Hefren-Tillotson, we are dually registered commission based and fee-based advisors. As fee-based registered investment advisors, we are required to be fiduciaries. As commission-based advisors, we are not required to be fiduciaries but to put your best interests and successes first as fee-based advisors do. Today, 91% of our business is fee-based. As part of our Client Relationship Summary, we explain the services offered and their fees and expenses, along with other information helpful in choosing a trusted advisor.

When your account increases, you make more and so do we.

Our founder, Art Hefren, always said to “do what is in the clients’ best interests all the time and you’ll be fine.” Being a fiduciary is just that: putting the clients’ interest firsts. We always do that – all businesses should be doing that or they will go out of business.

My father used to say, “Give the client your best. And if it is not your best, go back and make it your best before you show it to them.” He would tell people, “Well, you could do this on your own, but we will beat you over time – not every year, not every quarter – but with a better result.”

If you are currently with a financial advisor or seriously looking, and would like a second opinion regarding your financial planning, contact us at Hefren-Tillotson. We would be happy to help.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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