The Value of Investing with a Financial Advisor Versus Doing it Yourself
Paying fees for professional investment management is something we'd like to avoid. Why pay for some guy in a suit to manage your investments when you can do-it-yourself with a simple online brokerage account? There are many reasons to trust a professional - read on to find out whether it's worth it to go with the pros.
Active vs Passive
A key distinction for investors is whether you want a passive investment strategy or an active one. The difference is simple - active means making calls on the market, and passive relies on broad market positions without a lot of trading activity over time. The best performing active investor will (almost) always eat the performance of a passive one, but you need experience (and some luck) to make the right calls. An active DIY investor usually takes on too much risk without enough diversification. If you want to squeeze extra returns out of an active strategy, it pays to consult with the pros. Even passive investors can benefit from advice from an investment professional.
Expertise
investing takes a day to learn and a lifetime to master. Trusting yourself to research all the options and make the right choices for your future can be overwhelming - even if you have a degree in finance. Professional investment advisors are constantly reading and learning about markets, taxes, estate planning, risk profiles, and a thousand other disciples to provide advice to their clients. The world of investing only gets more complicated, so it's crucial to stay up-to-date. It pays to rely on an expert instead of doing it all on your own.
Unemotional
"Buy low, sell high" is the mantra for a good investor. Sounds easy, right? in reality, most DIY investors suffer from emotional decision making. They hold onto winning stocks too long and sell off their dogs at the bottom of the market. It's difficult to be emotionally unattached when it's your money on the line, and that's why millions of people around the world trust an advisor to make decisions on their behalf. It's all too easy to fall into emotional traps when it comes to your money, and a good advisor can help you through the up-and-downs of the market without buying or selling at the wrong time.
Taxes
One of the most overlooked aspects of investment strategy is taxes. The tax code is thousands of pages and makes for dense reading for an amateur investor. Professional advisors will help you maximize your after-tax returns without paying too much (or worse, not enough!) to the government. The pros will help you earn more after taxes without risking costly audits and reassessments.
Time
Lastly, the best value from working with a professional is free time. Most of us investors just want to save and get our money working for us. Let the professionals do the heavy lifting when it comes to research, strategy, and education. Life is short - do you really want to spend your free time reading charts and tax tables?
Investing takes a day to learn and a lifetime to master. Trusting yourself to research all the options and make the right choices for your future can be overwhelming - even if you have a degree in finance. Professional investment advisors are constantly reading and learning about markets, taxes, estate planning, risk profiles, and a thousand other disciples tp provide advice to their clients. The world of investing only gets more complicated, so it's crucial to stay up-to-date. It pays to rely on an expert instead of doing it all on your own.
Use the "Click for a Free Consultation" button if you would like to explore how we can guide you in making sounder investing decisions.
Edward C. Goldstein, CFP®, MBA, President
CERTIFIED FINANCIAL PLANNER ™ Practitioner
Financial Life Planning, LLC
10,000 Lincoln Dr. East, Suite 201
Marlton, NJ 08053
Phone: 856-988-5480
Fax: 908-292-1040
