With emerging technologies, the DIY trend continues in the financial industry. While it’s possible to invest on your own, studies show a financial advisor can net you more money. Here are 10 ways to decide if you should go the do-it-yourself route or hire a financial advisor.
How you know, it’s time to hire a financial advisor
1. You don’t know what you don’t know
If you take the DIY route, you don’t know what you don’t know. You may think you know enough to invest, but then again there are likely things you missed in your research. How invested are you? How much time do you devote to your finances every month? It’s probably a fraction of what an advisor spends.
Financial advisors are up to date on the latest rules, trends, and market shifts. Financial advisors offer you the insight you can’t get on your own. They also provide you the knowledge you didn’t know you didn’t know.
As a casual DIY investor, you may think you know the best ways to invest your money but do you?
Not only are advisors immersed in the financial markets daily, but Certified Financial Planners also take continuing education classes.
Retirement planning goes beyond investing in a 401-K. Setting it and forgetting it, as most DIY investors do, is a big financial mistake. A financial planner adjusts your portfolio as needed. It often pays off in the long-term, helping you achieve your retirement goals.
In the latest Russell Investments study, a financial advisor can add more than 4-percent to the value of your portfolio. In 2022, it was approximately 4.91%. That’s typically more than the fees you’ll pay for professional advice.
So what will the fees be? It depends on the type of advisor that you hire. Consumer Reports recommends a fee-only advisor. You pay a flat fee for their services, rather than commissions for the products they sell.
That way the advisor offers unbiased investment opportunities that fit your financial situation.
2. You can’t make a decision
There are so many ways to invest your money. That’s why it’s hard for the average investor to know where to start. Which funds make the most sense for your retirement future? If you can’t decide between all the financial products, funds, and investment vehicles – a certified financial advisor can steer you in the right direction and help you navigate the open road of investment choices.
Through a series of questions, a retirement checkup, and an analysis of your goals and retirement funds, the advisor will help you make the best decision for continued retirement growth.
He’ll be able to manage your short and long-term goals while balancing your portfolio. If you have children, your financial planner will guide you on 529 or college savings plans and your retirement options.
3. Analysis paralysis
Ever felt it? It’s frustrating. You spend hours researching a topic – whether it’s the best financial product or the best RV to buy for retirement – yet you still can’t make a decision. It’s analysis paralysis. You analyze every angle of every choice to the point of paralysis.
A financial advisor will break through your analysis paralysis.
4. Most people need to talk things out
Research is helpful but also paralyzing. That’s why it helps to talk things out, sort through the data, and make decisions. Who do you trust? Your friend, relative, or spouse? What’s their financial expertise?
Why not trust a financial advisor, with the built-in expertise? He can help you talk things out.
It’s especially crucial for divorcees who are making financial decisions for themselves and their children but don’t have a companion with the same vested interest to bounce ideas off.
Two brains are always better than one! You develop more ideas, gain different insight, and unique perspectives and approaches to saving.
5. You don’t have the right software
Organization is the most significant financial planning obstacle. If you’ve changed jobs over the years, you probably have investments in multiple accounts.
Financial advisors have access to software that can pull all your investments and create a one-stop-shop to analyze their performance.
At Open Road Wealth Management, we put all your accounts in one place. With account aggregation, you can see your assets and liabilities in one place even if they’re held with different companies. You can also see how each account performs, and your overall investment portfolio.
We use a network of software and cutting-edge technology to guide your decisions.
Think of your advisor like your GPS that guides you along the open road. It uses data, like a GPS uses traffic reports, to guide you on the quickest path to your destination. Your financial advisor will guide down the right financial roads to reach your investment goals.
6. You are emotional
Let’s face it – money brings out the emotion in all of us. That’s because we work so hard to earn it. If only money grew on trees!
Nobody wants to lose money, but it happens from time to time when you’re investing. A financial advisor can help you make decisions to minimize losses. He can’t prevent them or guarantee they won’t happen. However, he can talk you through a market decline and keep your emotions in check.
Emotion played a significant role when the economy collapsed in the mid-2000s. Investors opened their 401-K statements and experienced breathtaking drops in their retirement accounts. In one month’s time, people saw significant declines. Emotions affected how people handled those drops.
When you’re dealing with money, you don’t want to make decisions based on emotion. You need to make rational choices that make the most sense in the long term.
Investing is a roller coaster sometimes, and a certified financial advisor can keep your emotions in check through the ups and downs.
7. You thought about it 5 years and still haven’t met your financial goals
It’s great to dream up financial goals, but they’re only valuable if you execute on them. Financial advisors suggest you update your goals every few years. What are your financial goals, and are you close to achieving them?
If you made financial goals five years ago, and you still have met them – it may be time to call in an expert.
Life changes, so it’s essential that you update your financial goals periodically. A financial advisor makes sure you hit the reset button to adjust for changes in your lifestyle, job, and family.
8. You’re a delegator
If you like to delegate tasks, a financial advisor is a perfect fit for you. You can give your advisor guidance, but leave the heavy lifting to the financial expert.
When you interview your advisor, ask them how much they’ll do for you. They can do as much or as little as you need, within reason.
9. A trusted friend or family member hired a planner and saw success
Ask friends and family members if they’ve had success with a certified financial planner.
If you know a friend or family member who puts their trust in a financial advisor and saw success, it might be time you do the same.
Often, friends and family members will know someone local — in Kansas City or beyond.
Interview several financial planners, and ask them these specific questions.
10. Tired of Googling Financial Planning tips
There are all sorts of financial planning tips on Google. Who do you trust, though, and how long do you have to search to find the investment vehicles that are right for you and your situation.
Financial situations vary dramatically from person to person. There may be one-size fits all choices, but are they right for you?
A divorced dad needs to look at his finances differently than a married couple. A married couple with no children has different considerations than a married couple with three children.
Circumstances are personal, and a financial advisor gets to know you so he can make decisions that best fit your situation.
We all Google things! It’s a part of living in this technologically connected world. However, how often does the advise suit you? It’s like Googling something when you’re sick. Usually, the Google diagnosis is everything from a virus to cancer! That’s a big range!
Similarly, the same is true for financial investing. There are tons of investment options, each yielding different financial results. Therefore, get a certified financial advisor on your team who invests with you in mind.
Let me know how I can help!
-Todd