Last summer we finally made the family trip to Disney World in Orlando. It’s one of those experiences that has expertly been turned into a ‘do this or you’re a bad parent’ type of event. That’s the power of great marketing I suppose. While it was a great time for our family, there was one thing that stands out in my mind that wasn’t so great. It was the water park.
Now, the water park was actually the most fun we had while on our trip. Everyone agreed that it was just an amazing day with perfect weather and it just couldn’t have been better, except for one big thing. You see, in order to keep people from slipping on the pavement in this always-wet environment, the concrete was made to be very rough and anti-slip. The result of this attention to safety was very, very sore feet. I’m talking, ‘walk around like a kitten who was just declawed’ kind of sore feet. It was so painful that we limped out of there and couldn’t wait to get our shoes on and get our feet elevated. What was almost as painful was the realization that this was completely preventable.
Had we known what questions to ask ahead of time, we would have entered the park with pool shoes on and the end of our day would’ve been so much different. Rather than walking on bloody stumps, we would’ve been chasing each other to the car, laughing and smiling the whole time. Bummer.
When it comes to investing and planning for retirement, there’s an argument sometimes made that a person should just invest in inexpensive Vanguard funds and not bother working with – and paying – an advisor. After all, if we add no value, then why pay anything for that lack of value? Well, if that’s true then I agree completely! Why pay for something, or someone, if you get no value in return?
What does this have to do with the water park? Put bluntly, if we’d have consulted with, and paid a trip advisor, they likely would’ve told us to wear pool shoes to the water park and it would’ve made an enormous difference in our level of satisfaction during our trip. In other words, someone who specializes in such things is bound to have picked up a few ideas along the way that far outweigh the cost of their advice. And when we were walking around that waterpark, I would have paid just about any price for a pair of pool shoes. The funny thing is though, had I actually brought the shoes on the advice of the trip advisor, I probably wouldn’t have valued that advice very much because I would never have felt the pain of the sore feet!
When well-intentioned people suggest that we go it alone in any endeavor in order to save some fees, what they’re really saying is that they know more or will work harder to learn more than the person who’s offering the service. Because this is sometimes true, I can’t say they’re wrong. What I will suggest is that doing something once doesn’t make us an expert and thus means we don’t have the knowledge to avoid pitfalls. Instead, dedicating a career to a discipline means we find those golden nuggets along the way that may either save a family’s sore feet or avoid poor investing decisions, prevent paying unnecessary taxes, or missing an opportunity that could protect a person’s life savings from a predator or creditor. This is what an advisor does.
By the way, the same Vanguard that our well-intentioned friend said to invest with directly to avoid paying an advisor, studied this topic and found that an advisor that provides comprehensive planning is worth around 3% per year on average; not every year, but on average (study available upon request). So I guess I’m saying that you’re free to enjoy the waterpark for a few hours but end up with cut-up feet if you’d like, but I’ll invest in pool shoes next time and be very happy with my investment. Some experiences just aren’t worth that kind of risk; maybe retirement is in that same category?
All the best,
Adam Cufr, RICP®