When John Bogle founded the Vanguard Group in 1974, his objective was to create a no-load financial services firm accessible to the investor. His flagship index fund, the Vanguard Index 500 fund, was the first of its kind available to the general public and attracted many do-it-yourself investors.

Now, some 40 years later, it seems as though Vanguard, the company that administers the Employee Savings and Investment Plan (ESIP) for Chevron employees and others, now recognizes the value that financial advisers can bring their clients by pointing out some inherent risks that retirees could face when managing their own accounts.

In their report, Vanguard points out that investors working with a qualified Financial Adviser can help address some the following pitfalls:

Running Out of Money Too Soon

Let’s face it, people are living longer! Many retirees today will spend almost as much time in retirement as they did working as advancements in healthcare continue to push life expectancy farther into the future.

As people are living longer, your nest egg may have to sustain you for a prolonged retirement that could last 30 or more years.

A financial adviser that specializes in income planning can help you determine a suitable withdrawal rate and provide guidance on how to best implement a draw-down schedule from your retirement accounts to help protect you from running out of money too soon.

Managing Risk

Maybe you’ve heard the old saying, “Don’t keep all your eggs in one basket”? That advice may make sense to farmers, but how does that apply to the average investor? The implication, of course, is to spread your retirement assets around to help reduce risk.

But how does the average investor know where to invest in order to adequately spread their risk?

A financial adviser can help you diversify your retirement savings across many asset classes to help lower your risk. While diversification is no guarantee from losing money in a declining market, but it can help you mitigate your losses.

Keeping Economic News in Perspective

We are emotional beings that can be swayed by the news de jour and can make the wrong decision at the worst time by buying high and selling low.

Economic cycles come and go. Recessions and stock market corrections are normal and regular events that investors should not only expect but plan for. Without a plan, investors can suffer as they scurry for options.

In the Vanguard report, they point out that financial advisers should have the ability to effectively act as a “behavioral coach”, helping their clients make sound financial decisions in the midst of difficult financial markets.

There’s much more to managing your retirement assets than producing the best investment results – that’s only part of the value your adviser can bring to you. A qualified financial adviser should be able to review your entire financial picture and develop a strategy that not only addresses the fundamentals – such as choosing suitable investments – but he should also be able to manage the emotional concerns that retirees can face.

Those of us in the financial services industry have always recognized the value that we can bring to our clients.

And now, The Vanguard Group recognizes that, too.


The opinions expressed are for general information only. They are not intended to provide specific advice or recommendations for any individual. Sturm Financial, LPL Financial, and Vanguard are separate and unrelated companies.