Recent research shows working with a financial advisor is the key to asset accumulation, says Dawn Marchand, vice-president of marketing and direct distribution for CBIA/Lawyers Financial.
The report, conducted by the Quebec-based Centre for Interuniversity Research and Analysis Organization, found that within four years of availing themselves of financial advice, investors’ assets grew almost twice as fast as those who went it alone.
By the 15-year mark, advised investors accumulated almost four times more assets than comparable non-advised investors, after adjusting socio-economic and attitudinal differences.
Though the numbers are striking, the reasons for the disparity are relatively simple, Marchand tells AdvocateDaily.com.
“Working with an advisor helps to establish a plan,” she says. “From there, it’s much easier to determine how much you can and should put aside, and it also allows you to make better use of tax-saving strategies.”
Without an advisor to help set an appropriate risk profile, she says individuals are unlikely to be investing at the optimal level.
“If you’re in your 30s and you’re only investing in bonds and treasury bills, which are relatively low-risk activities, then you’re losing out on opportunities for growth,” Marchand explains. “Or you could be the other way — throwing everything into equities and penny stocks your uncle tipped you off about, which is very risky.