Should I Use a Financial Advisor or Do It Myself?

Putting money away for your future is always a good idea. While stuffing your mattress with $100 bills is alluring, it will only ever be worth as much as the face value. You want your hard-earned income to grow only through investing.

There are many ways to invest your money, but to be successful, and you need knowledge and experience for guidance. This can be with your education and action or a profession that does it for a living.

Not sure what to do? The only question to ponder is, should I use a financial advisor or do it myself?

What does a financial planner do?

A financial advisor works with people to manage their money and help them reach their financial goals in the short, medium and long term. They are trained in various aspects of finance, including:

  • Investing
  • Budgeting
  • Retirement planning
  • Financial management
  • Asset allocation
  • Estate planning
  • Tax planning
  • Risk and insurance management

You will typically start with a first visit to a financial advisor, where they will go over your goals about retirement and the lifestyle you want to achieve. You don’t need to have that all figured out because this is part of what they are there to help you navigate, and they know to ask the right questions to put you on the best path.

What to bring to the meeting

Things you need to bring to your meeting are:

  • Any financial statements you currently have from your bank, brokerage and accountant.
  • A summary of your current debt, including mortgage, loans, and credit cards, along with their terms and interest rates.
  • A statement of your income and expenses to see what your cash flow is.
  • Any insurance coverage you currently have.
  • What are your goals for your financial future.
  • Any questions you want to ask to better understand finance and the advisor’s qualification.

You are sharing all your financial information with them, and in return, they will assess your current situation and discuss the steps it will take to get you to your goals.

Benefits of working with a financial planner

Here are the advantages of having a financial advisor:

  • They are an expert
  • They take the emotion out of investing
  • They will save you time

Many people work with financial advisors because this is what they do for a living. It can be difficult to dedicate enough time to properly manage your own money so you can use the advice and guidance of a financial professional.

Do-It-Yourself Financial Planning

Many people like to get their hands dirty and take on the role of their financial advisor. It may seem overwhelming, but that is because it is. Unless you have a background in finance or accounting, you may find it hard to manage all aspects of what a financial planner does, so it is best to take it slow.

Start by getting your budget set and allocating a fixed amount of money to invest every month. It could be $50 or $5,000, whatever you can comfortably put aside, but make this a discipline you keep. Now, you need to set up a strategy for investing, ensuring you do not put all your money into one sector or investment vehicle. That way, if something goes down, your other investments can shore it up.

Do your research and lots of it. Talk to friends about their investments and take advice from those who are successful and in positions you want to achieve. Decide your risk level, and then get started with a small amount of cash to test the waters. As you gain confidence and experience, diversify and track everything.

Benefits of doing it yourself

What are the advantages of going it alone?

  • You control exactly where your money is invested in
  • You can save money on fees
  • You can do it from the comfort of your home online

Different life events can drastically change your financial picture, affecting your investment level. These include:

  • Inheritance
  • Marriage
  • Becoming a parent
  • Divorcing
  • Opening up a business
  • Selling a business
  • Changing careers
  • Becoming a caregiver

Financial Advisor vs Do It Myself

As your finances get more complex, so does the management of them and you may find it too much to handle. You can choose to have a financial advisor handle the long-term goals with strategic investing but leave enough monthly for you to invest. This can be the best of both worlds, and you may find that you want to take over more control or realize that they should handle all your money.

Should I use a financial advisor or do it myself? There are no right or wrong answers, depending on your interest, commitment level and time available to properly manage your finances. In the end, you will make the best decision for your future, and while you are deciding, do some research to make an informed choice.