Why Work With a Financial Advisor vs. DIY Investing

Is the cost of a financial advisor really worth it?

Managing your finances is a critical task that shapes your future and your peace of mind. In today’s world, you’re faced with a pivotal decision: should you hire a financial advisor or take the reins and do it yourself?

The Case for DIY

Many individuals choose to manage their investments themselves for the following reasons:

• Maintain personal control: many want to make their own decisions about what investments to put their money into and how they invest.
  
  
• Enjoy learning: some folks like to stay engaged directly with financial markets and informed about the latest law changes. It’s important to stay engaged in what happens with your money and investments. Self managing keeps you accountable to everything going on (good or bad) with your funds.
  
  
• Time and dedication: not everyone has the free time or the space on their to-do list plate to handle their own financial assets. If you do have time and will be diligent about keeping up with it, managing your own assets could be an enjoyable task for you.
  
  
• Save on advisory fees: the cost of a financial advisor can often cause many to pause when they are looking at building their hard earned money into wealth.
  

While DIY investing empowers people with autonomy and potential cost savings, it also demands time, dedication, and a proactive approach to financial education and decision-making. When your financial life is uncomplicated, sometimes this can be a better option. A couple of great books to help the Do it yourselfer: The Automatic Millionaire by David Bach and Psychology of Money by Morgan Housel are two of my favorite.

When it’s time to bring in an advisor

Have you ever had an ailment and tried to self-diagnose with WebMD? Or had a tax question and you tried to find the answer on Google? Sometimes the answer is straightforward but other times, it’s complex and you’re not sure you’ll get the best information via your own research. Financial advisors are experts in the world of finance, just as CPAs are with taxes or doctors with the body. Here are some reasons why it might be time for you to work with an advisor:

• Having a Team Captain: Financial advisors come in many flavors. If you work with one that does holistic planning like we do at CAM Investor Solutions, they can help you in many areas. Holistic advisors don’t just help with investments – they also help with estate planning, tax planning, education planning, and retirement planning. You may not need all these right now, but at some point in your life you likely will.
  
  
• Complex Financial Situations: As your financial landscape grows more intricate — be it due to owning a business, high net worth, diverse income streams, or complex investments — a financial advisor can offer the expertise you need to optimize your strategy.
  
  
• Major Life Transitions: Life events like career changes, inheritance, family changes or retirement significantly impact your financial planning. An advisor can provide valuable guidance to navigate these transitions smoothly. You don’t have to walk through these alone, guessing if you’re “doing things right”. An advisor can be your experienced guide.
  
  
• Lack of Time or Interest: If financial management feels burdensome or if you’d rather focus your time elsewhere, a financial advisor can take the helm, ensuring diligent oversight of your financial health. Don’t stress about needing to become an expert or get a certification in finance to manage your own wealth. Advisors have gone through the education required and keep up with all the latest laws and news for you.
  
  
• Need for Customized Advice: Personalized financial strategies like acquiring stock options, reducing taxes or any unique scenario that considers your circumstances, goals, and risk tolerance can significantly enhance your financial outcome, an area where financial advisors excel. Advice on social media or the TV is not customized to you. Implementing what your friends are doing is not necessarily going to work for you. Creating a plan that incorporates all YOUR unique circumstances will get you a lot closer to your goals.

What you may be missing without an advisor

There are a few things that can be overlooked by a DIY investor. A great financial advisor is (should) do more than just invest your money. Investing is just one small component of someone’s financial life. We need to consider how to plan for the unexpected in life, how to come up with alternative solutions, and review what-if strategies for various life situations so when the unexpected happens, you can recover financially.

Money is emotional. A financial advisor can help be a sounding board and keep your grounded during tumultuous markets or difficult situations you’re facing. Should you buy the bigger house? Is your friends start up a good invest for you? How will retirement look if you retire at 55 or 65? How will changing your investments because you’re concerned about political news or a bad economy affect your portfolio? What’s better than getting these answers from Google? Asking a trained professional!

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While advisors offer expertise, personalized strategies, and convenience, self-managing promises autonomy, lower costs, and direct control. Ultimately, the best choice aligns with your comfort level, financial goals, and commitment to either learning about the financial markets or entrusting your assets to a professional. Reflect on your financial objectives, lifestyle, and how you define peace of mind when making this pivotal decision.

Disclosure

M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. 

This blog has been provided solely for informational purposes and does not represent investment advice. Nor does it provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy.

Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.