During the ten days of track and field competition at the recent World Athletics Championships, athletes ran faster, jumped higher, or threw farther than ever before. In process they set three world records and ten meet records.1
So what enabled them to achieve these new levels of success?
You might guess that the athletes were simply in better shape than the last time they competed. But the actual reason is much more complex.
You do have to be in peak condition to set a world record in track and field. But that alone isn't enough. Elite athletes reach that level by working with elite coaches, experts who take into account not only the athlete's unique physical attributes but their mental state as well.2
If it was just a matter of getting into the best shape through the right workouts, training could be managed by sophisticated computer applications. There'd be no need to hire an expensive coach. Fitness apps are fine for regular people who just want to get into better shape. But to reach your full potential, even as an amateur, you need personalized, expert coaching.
At a certain level, simply training harder will not result in the desired gains, and instead is likely to end in injury.
The same principle holds true for being a great, life-long investor. Following a rote program or using an app to choose your allocations could be better for your retirement account than not saving at all. But it turns out that you're more likely to achieve financial success with the help of an expert—someone like an elite coach who takes into account your attributes as a person.
Vanguard recently conducted a study where they compared the experience of self-managed investors (those who directed their own portfolios through platforms using automated "robo-advisors") with those who worked with a human advisor.3
The study was unique in that the researchers looked not only at the performance of the investors' portfolios, but also their emotional experience and their intent to continue down the path they were taking.
The survey found that not only did those investors who worked with an advisor feel much more supported in their efforts, but they reported expecting 5% higher returns ($160,000 on average) than those going it alone. Additionally, 88% of those managing their portfolio via robo-advisor said that they would consider switching to a human.
Things like asset allocation and investing strategy are important, but they make up only one part of an integrated financial planning and investing process. To get the other essential ingredients you need an expert who can assess your unique situation in ways an online questionnaire can't.
Like an elite coach, your trusted advisor evaluates your risk tolerance, your timeline, and most important, your unique attributes as a person. The result is designed to deliver a personalized, long-term plan and a supportive relationship that together give you the best chance for success.