At some point, it’s likely that you will have this question: should you manage your investments yourself or should you hire a professional to help?
Since I am an investment manager, you can probably guess my bias, but I do believe that working with a professional financial advisor is best choice for most people. However, there are some very important caveats to my view ….
Do You Have The Skills To Do It On Your Own?
Please allow me to share a story.
When I was in high school, I enjoyed working on my truck. Nothing requiring real skill, just simple things like installing fog lights and switches.
Years later, when I graduated from graduate school, I was a bit surprised at the extra time that I now had on my hands. I was working full-time in the finance field, and, yes, that was a lot of work, often more than 40 hours a week. Nevertheless, my work took up less of my time than did graduate school. With this new free time, I thought that it might be fun to get back to working on my car. I thought that a great place to start would be learning how to change my oil, since that would also save me some money because I wouldn’t have to pay a mechanic to do that for me.
I spent hours of my time trying to learn how to change my oil. This was, of course, before the days of YouTube, so this task involved reading books, talking to people I knew, and tinkering with my car. I spent hours and hours of my time trying to learn how to change the oil in my car.
I was eventually able to change my car’s oil, but it took me far longer than it took my mechanic, and it was time that I would have rather spent doing things that I enjoyed.
There’s No Substitute for Expertise
Eventually I decided that all the time I spent on changing the oil in my car was not worth the savings that I got by doing it myself. But I also realized something more important …
Every time I took my car in to get an oil change my mechanic did a very thorough inspection of my car. He checked the tread on my tires. He inspected the CV boots for tears. He was able to see problems or potential problems on my car which, if not addressed, could leave me stranded on the side of the road or lead to costly repairs. He knew things and could see things that I could not. He was an expert in cars and I was not.
I eventually decided that by having my mechanic change my oil I would have a much better overall experience with my car. In addition, I could spend my free time doing things that were more important to me in life than changing my oil.
By letting an expert work on my car, I gained better performance from my car and I was able to spend my own time on what was important.
The same is true for investing.
The Difference a Financial Advisor Can Make
Financial advisors have training, tools, and processes to dramatically improve your investing outcome.
Perhaps most important of all, hiring a professional advisor frees you up to do the things you love most in life and lowers the stress that can come from managing your own finances.
Ultimately, of course, the choice is up to you, but don’t let the fact that you have to pay for advice deter you. Sometimes, with the right person, the value a professional brings is worth far more than the fee you pay.