3 Reasons DIY Investors Should Seek Regular Advice
If you’re a DIY investor, it stands to reason that you have some pretty good technical knowledge about how the markets work and why it’s a good idea to build a diversified portfolio. You also probably understand how to rebalance your assets, and whether you’d be better off with a Traditional or Roth 401(k).
If you’ve been making money and protecting your assets this way, does it still pay to talk to a financial planner?
In short, absolutely.
First, let’s be honest. At least part of the reason that many DIY investors go this route is to save on fees that advisors would charge. And while there’s certainly nothing wrong with that, what I can say is that there are times when paying for a little advice or guidance can go a long way toward better financial stability in the long run.
To put it another way, you certainly could try to figure out what illness you may have by researching online and talking to friends and family members. But at the end of the day, getting the input of a trained physician will give you the answers you need to either take next steps or rest easy knowing you’re healthy.
If you are a DIY investor who is toying with the idea of getting some help, or are someone new to the investment world who is trying to decide between paying for advice or going it alone, below are 3 reasons why the benefit of talking to a professional could make a positive impact.
Your Goals Can Change
When you’re 20, you may have a pile of student loan debt and think getting it paid off is the largest financial obstacle you’ll ever have. But by the time you hit 40, you’re trying to figure out how to get your children's education paid for.
Additionally, your time constraints and priorities may change. What was once easy for you to review and manage becomes more time consuming. Would you rather sit for a couple of hours reviewing financial statements and trends on a Saturday morning or would you rather go to your child’s soccer game? The ability to have a regular meeting with a financial advisor frees up your time so you can spend it elsewhere.
By talking to a CERTIFIED FINANCIAL PLANNER™ professional, you can discuss your needs and wants and he or she can help you map out a plan that can get you there. These discussions can give you the confidence that what you’re thinking is on track but also be a safety net in case one of your ideas may not be the best course of action. Also, with the experience that this person has, an advisor can ask questions that you may not have considered or pose topics that you hadn’t built into your plan, such as long-term care planning or contingencies if something unforeseen happens.
Your Income Can Change
Money management is a lot like calories from food. It’s not so much the math behind it, but the execution of getting to the numbers that we want.
For example, our doctor tells us to aim for a maximum of about, say, 2,000 calories per day. That, on the surface, is easy. The hard part is making sure that we get the nutrients that we need at or under that calorie number.
This is where a good physician can work with someone to make sure they are eating the proper food and working in some exercise to their health plan.
Investing is no different. To retire with a certain income goal, we know we have to put away a certain amount per year and earn a certain amount of interest. The math is easy to work through. It’s the decisions we make with the income we earn that can sometimes get us in trouble.
By working with a CERTIFIED FINANCIAL PLANNER™ professional, we can better see where our spending is going and if the investment vehicles we’ve chosen are working as they should.
Even if you only have an employer-sponsored 401(k) plan, your financial advisor can help you rebalance your contributions and expense plan based on any raises or bonuses you receive.
Markets Can Change
One last reason to consider a CERTIFIED FINANCIAL PLANNER™ professional is because just like going for a test to confirm that there’s nothing seriously wrong with you, financial advisors can keep you calm during market volatility. Hearing from someone who has been there and understands market nuances as well as the big picture can ease your worries when turbulence sets in.
Additionally, there may be several alternative routes that you never considered delving into that may be a better fit for your goals at the time. It really depends on your situation and what the overall market is doing.
Relying on a CERTIFIED FINANCIAL PLANNER™ professional can take much of the worry out of this process by allowing you to not second guess yourself since you’re working with someone who does this type of work for a living.
The Bottom Line
Can people manage their money completely without the help of a CERTIFIED FINANCIAL PLANNER™ professional? Yes, of course. However, seeking out professional advice could be the difference between a comfortable retirement on your own terms and having to keep coming to the office.
Much like consulting a physician for any physical issues you may have, it’s probably a good idea to seek out the advice of a CERTIFIED FINANCIAL PLANNER™ professional to help make sure your finances are in good health as well.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.