The Importance of a Wealth Advisor

Published August 15, 2017 

Reading Time: 5 minutes

Written by: The Zoe Team

The importance of a wealth advisor goes beyond helping you manage your money and maximize your earnings. It’s also about trust and expertise.

As part of our in-depth Wealth Advisor Series, we’ve outlined the different ways in which advisors make money and looked into the differences between a broker and an independent advisorIn this post, we dive into the importance of a wealth advisor.

What A Great Wealth Advisor Is NOT

Over the last two decades, the value of an advisor (broker or independent) has changed dramatically. Back in the day, the value was in their ability to “beat the market” by picking the right stocks, bonds or mutual funds on your behalf. The reality is, however, that most investors in the world cannot beat the market consistently. Historically, even if you did not think your advisor could beat the market, there just was no other option, if you wanted to invest you had to go through an advisor. Fortunately, the tremendous growth of low-cost ETFs (Exchange Traded Funds) over the last 20 years, has provided a passive, direct option to investors. It allows them to replicate the performance of the market for a fraction of the cost of active mutual funds that try to outperform the market.

These low-cost passive ETF vehicles have paved the way for robo-advisors over the last decade. Robo-advisors are really robo-allocators that invest your savings into a well-diversified global portfolio, which automatically rebalances and reduces risk as you get older. Because they do not offer any human services and their solution is “cookie-cutter,” they can charge a very low fee compared to a human advisor.

The combination of low-cost investment vehicles, like ETFs, and the automation of asset allocation and rebalancing of portfolios, has commoditized a large portion of the portfolio management aspect of the job. This means that it should be a given, all decent advisors should be able to manage your portfolio. A great fee-based wealth advisor is unlikely to talk about these tasks as THE value-added.

Wealth Planning Expertise

It was not long ago that proper wealth planning was only provided to the ultra-wealthy. Why? Because, if done well, it is like having an elite household CFO that looks at your wealth holistically, incorporating risk management, budgeting, taxation, estate planning, and investments

This personal finance “black belt” assesses your current situation and considers your short and long-term goals to determine the most efficient way of allocating resources to achieve them. In other words, only the rich used to be able to afford it since to do it well, it takes a lot of work by trained experts. As portfolio management tasks have become more automated, great advisors have focused their value-added on wealth planning.

Behavioral Coaching

We as humans can act irrationally during times of stress. As such, a great advisor will keep your emotions in check when making decisions about your money and help you to “cut through the noise” of the markets.

They will do this using both hard and soft skills. They will have facts and historical insights at their disposal, demonstrating how emotional decisions have been damaging in the past, and they will remind you of your values and goals. Both techniques will help you stay the course when you are tempted to make big decisions out of fear, anger, or greed.

Vanguard wrote a white paper that argues that good advisors generate an additional 3% annual return when compared to clients who invest alone, with the largest contributor being “behavioral coaching.” Great advisors protect you from yourself.

Create Rewarding Client Experiences


A great advisor, like a great personal trainer, helps client honor their commitments. They keep you focused on your highest priority goals. Regularly reviewing progress and providing helpful tools to make it easier for you to achieve your life-long wealth goals. They may call you out on excessive spending or poor decision-making. It may not be pretty, but a great advisor keeps you in check.


A great advisor empowers their clients through knowledge. They don’t tell you what to do but rather educates you as to the options, risks, and frameworks. Once you are on the same page and understand everything in plain language, you will be ready to make your own decisions with the guidance of your wealth advisor.


Great advisors will not dance around how they earn their keep or what areas of their job are easily automated. Since they are not hiding anything, a great advisor will walk you through how they earn their fees. A great interest-aligned advisor is an open book.


It may sound funny, but a fair number of advisors we interview during our vetting process, act as if they are doing their clients a favor by managing their wealth. A great advisor uses a client-centric approach by focusing on solving problems (whatever they might be) for the client, rather than lecturing them on what they are doing wrong.

What is the Importance of a Wealth Advisor?

A great wealth advisor will start all conversations with questions, not answers. They will want to understand what you value, your pain points, your goals, and your aspirations. They will use their years of training and experience to create a thoughtful framework that will lead to a comprehensive plan of attack. This plan won’t be stored in your attic to be forgotten – the advisor will make sure it is a living breading dynamic document that changes as you evolve as a person.

If you are considering hiring an RIA or broker:

  1. Understand how they get paid and how this payment method aligns with your best interests.
  2. Ensure that the advisor is truly on your side.
  3. Make sure that they are actually adding value where it matters most.

Disclosure: This material provided by Zoe Financial is for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Nothing in these materials is intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Zoe Financial is not an accounting firm- clients and prospective clients should consult with their tax professional regarding their specific tax situation. Opinions expressed by Zoe Financial are based on economic or market conditions at the time this material was written.  Economies and markets fluctuate.  Actual economic or market events may turn out differently than anticipated.  Facts presented have been obtained from sources believed to be reliable.  Zoe Financial, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. 

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