Does your investment advisor provide a financial plan?

Recent research by Vanguard shows that between 30% and 50% of clients do not get a financial plan from their investment advisor and that the smaller the client’s portfolio, the less likely they are to get one. In other words, the focus is on portfolio management versus financial planning.

Lyon Park sees this as backwards; it’s like focusing on how fast you’re going without considering where you’re going and whether or not you’ll get there. A rocket ship will take you to the moon but it’s not the best choice for a trip to the grocery store.

In fact, we believe that portfolio management is the easy part and that financial planning is the real value an advisor adds. Nearly all peer-reviewed research shows that a focus on specific investment dimensions implemented with low-cost index funds consistently beats actively managed investment solutions. To a significant degree, successful portfolio management is formulaic. That’s what robo-advisors do: manage portfolios based upon formulas. But robo-advisors don’t do well is articulate and match clients’ goals for well-being, their fiscal philosophy, and their life events with the appropriate spending and investment priorities.

At Lyon Park, we’re not against robo-advisors, we’re for financial planning. We do financial planning before we even consider investment advice. We provide a stand-alone financial plan with portfolio management as an option. We can manage your portfolio, you can do it yourself, or you can engage a robo-advisor.

If all you want is portfolio management, consider robo-advisors. They can manage your investments using formulas at a reasonable cost. But if you want to know where you’re going you’ll need a financial plan tailored to you.