The Benefits of Professional Investment Management
If you’re working with or looking for a financial advisor, you’ve likely encountered two different service models:
- Advice-only: you receive investment guidance but manage your own portfolio
- Full-service wealth management: your advisor handles both the planning and the execution
Both models have their place, but for many people – especially those in or approaching retirement – there’s a compelling case for handing off investment management.
We’ve had prospective clients ask us, “Why can’t you just tell us what to invest in and we manage the portfolio?” It’s a fair question, and the answer comes down to this: We’ve found that delegated management enables us to do our best work for clients and it consistently delivers better outcomes.
Here’s why:
The Research on Advisor Value
Before diving into specifics, it’s worth noting that several major research studies have sought to quantify the value of professional investment management. Vanguard’s Advisor’s Alpha study found that advisors following best practices can add up to 3% in net returns annually after accounting for fees.
Morningstar’s Gamma study found that smart financial planning decisions (including asset location, optimized withdrawal sequencing, and dynamic withdrawals) can increase retirement income by 22.6%, equivalent to about 1.59% per year in additional returns.
The research shows that smart asset location – strategically placing investments across taxable, tax-deferred, and tax-free accounts – can add up to 0.75% per year in value for some investors. This kind of optimization is more challenging for individual investors to implement and maintain.
The returns mentioned in these studies aren’t from stock-picking or market timing, they come from systematic account management, tax efficiency, and keeping investors on track.
Let’s explore how clients benefit from professional investment management.
The Execution Gap Between Advice and Action
Even with excellent investment advice, there’s often a gap between knowing what to do and actually doing it. Think about some of those items on your “to do” list and how long they’ve been on it.
Investment advice is only valuable if it gets implemented. Many advice-only clients procrastinate on executing recommendations, especially complex ones involving multiple trades across different accounts. Life gets busy, the urgency fades, and before you know it, months have passed.
Delegated management removes this friction entirely. The work simply gets done. When we identify an opportunity or need to make an adjustment, we execute it. There’s no email sitting in your inbox waiting for you to find time to act on it.
Advisory firms also have access to cutting-edge portfolio management tools that systematically implement and maintain portfolios – technology that simply isn’t available to individual investors managing their own accounts.
Disciplined Portfolio Maintenance
One of the underappreciated benefits of full-service wealth management is the ongoing, behind-the-scenes work that keeps your portfolio running smoothly. As markets move, your allocation naturally drifts away from its target. A portfolio that started the year at 60% stocks and 40% bonds might drift to 65/35 after a strong equity run, which means taking on more risk than you intended.
With delegated management, rebalancing back to your target allocation happens systematically. We’re not waiting for a quarterly review or hoping you remember to log in and check things. The same goes for putting cash to work as dividends and interest are paid into your accounts. These distributions can sit idle for months if no one is watching, but with account management, that cash gets reinvested according to your plan.
These small, consistent actions compound over time.
Having a systematic approach also removes emotion from the portfolio management process. If it’s time for you to rebalance your portfolio and you need to sell US stocks to buy international, are you hesitating and wondering if this is a smart move? Your investment strategy calls for it, but you might be second-guessing every transaction. Having your advisor manage your accounts solves this issue.
Real-Time Responsiveness to Market Opportunities
Markets don’t wait for convenient moments. When volatility creates opportunities for tax-loss harvesting, strategic rebalancing, or timely Roth conversions, professional management means you don’t have to worry about scrambling to get online when you’re traveling or are otherwise occupied.
During periods of market volatility, we often see stocks sell off while bonds rally as investors move to safer assets. This creates meaningful drift in portfolio allocations – a balanced portfolio that started the week at 60% stocks/40% bonds might be significantly off target after just a few days of turbulence.
This kind of environment presents immediate opportunities: rebalancing back to target allocations by selling bonds that have appreciated and buying stocks at temporarily lower prices, capturing tax losses in positions that have declined, and potentially even executing Roth conversions when account values dip.
For clients managing their own portfolios, capturing these opportunities requires monitoring accounts in real-time, calculating which trades to make to restore your target allocation, ensuring you don’t trigger wash sales, and executing everything correctly. And if you happen to be on vacation, occupied with other priorities, or simply check your accounts after things have stabilized – the opportunity is gone.
With delegated management, these tactical moves happen when the opportunity presents itself, not when you happen to check your accounts. We monitor for these situations and act when conditions warrant, ensuring you capture opportunities that might otherwise slip by.
Better Visibility for Tax Planning
Here’s something that doesn’t get talked about enough: when we manage your investments, we have full visibility into your portfolio at all times. This isn’t just convenient – it’s genuinely valuable for planning purposes.
With assets held at our custodian, we can track actual income as it’s received and forecast future income with precision. We can see your cost basis for each position, which is critical for tax-efficient withdrawal strategies and for identifying tax-loss harvesting candidates. We can also calculate your Required Minimum Distributions accurately and plan for them well in advance.
This visibility translates directly into better tax planning. When we’re projecting your tax liability for the year, we’re not guessing based on outdated statements or asking you to log in and send us screenshots. We have real-time data that allows us to make informed recommendations about Roth conversions, charitable giving strategies, and which accounts to draw from when.
Asking an advisor to do tax planning without transaction-level visibility is like asking a doctor to diagnose you without blood test results. They can make educated guesses, but they’re essentially working blind.
For advice-only clients, this coordination is much harder. The advisor is often working with incomplete or outdated information, and recommendations may not account for recent portfolio changes or income that’s already been received.
Time Savings and Mental Bandwidth
Investment management can genuinely be time-consuming. Between researching positions, monitoring your portfolio, staying current on tax law changes, executing trades, and tracking everything for your records, you could easily spend dozens of hours per year on portfolio management.
For retirees, this time has real value. You didn’t work your whole career to spend your retirement staring at brokerage screens and second-guessing your decisions. Delegating this responsibility frees up mental energy for the things you actually want to do – whether that’s traveling, spending time with grandchildren, or simply enjoying the retirement you earned.
A Hidden Tax Advantage
There’s one more advantage to delegated management that often surprises people: a portion of your advisory fees may be tax-deductible.
When you have a pre-tax retirement accounts under management, fees can be billed proportionally across all accounts. The portion billed to your traditional IRA is effectively paid with pre-tax dollars, since it reduces your IRA balance (and therefore your future taxable RMDs) rather than coming out of your after-tax pocket.
This doesn’t work with advice-only arrangements where you’re simply paying a flat fee from your checking account. It’s a small but meaningful benefit that can offset a portion of the cost of professional management.
The Bottom Line
The value of professional investment management isn’t about beating the market. It’s about disciplined execution, tax efficiency, and proactive planning – benefits that compound significantly over a retirement that could span 30-40 years, or more.
While advice-only engagements can work well for hands-on investors who genuinely enjoy managing their own portfolios, delegating investment management makes sense for those who want timely execution, tax optimization, and the peace of mind that comes from knowing their financial strategy is being implemented correctly and consistently.
If you’re currently managing your own investments, it might be worth exploring what full-service wealth management could look like for you. The goal isn’t to take control away from you; it’s to handle the execution so you can focus on enjoying the retirement you’ve built.
About the author: Allen Mueller, CFA, CFP®, is an “engineer turned finance nerd” and founder of 7 Saturdays Financial, a wealth management firm based in Dallas, Texas.
The core focus of 7 Saturdays Financial is helping high performers retire with confidence and make the most of their 7 Saturdays a week.
