Why do you need an investment manager?
It’s a common question among investors who don’t have an investment manager: Why would I pay someone to manage my money? Can’t I do that myself with a cheap, online brokerage platform?
The answer of course is ‘yes, you can manage your own money on any number of brokerage sites.
However, as a professional financial planner and investment manager, I’ve noticed at least 3 reasons why you may want to consider hiring a professional to come alongside and help you with such an important responsibility.
And they may not be the reasons you think.
3 Reasons to Consider Hiring a Professional
First, your investment advisor will help you to continuously and quickly invest cash in your investment accounts.
One of the most common issues with do-it-yourself investing is thinking you can time the market with your cash. Over and over, I encounter clients who have been sitting on cash (to varying degrees) in retirement investment accounts.
Remember, you can’t even get at this money until you are 60 years old. Also remember, if you are 60 years old, you likely have a 30-40 year retirement on the horizon. Compound interest only works when you let it work.
That means keeping your cash invested continuously and quickly and a financial advisor will help you do this.
1. When do things always go according to plan?
Second, an investment advisor will help you stay accountable to the savings and investing goals you set for yourself.
When you are going it alone, it’s easy to make excuses, blow past personal finance deadlines, and feel like you are doing alright when you have one too many blind spots. A great financial advisor will help you stick to your investment plan.
But when things don’t go according to plan, your advisor will help you course-correct and make appropriate changes.
And let’s be honest, when do things always go according to plan? Helping you make adjustments and not simply ignore important financial decisions is what your advisor is there to help walk you through.
2. Making progress, moving forward
Next, your advisor should make you a person of action! With financial decisions, it’s far too easy to push a final decision to the background.
Even once you’ve made a final decision, executing that decision can take weeks, or, more likely, months.
Your advisor not only helps you make the decisions but helps you execute the decision promptly.
Whether you need to re-balance your portfolio, make an allocation change, or review your fund expenses, your advisor helps the action happen.
Put simply, your advisor helps keep you moving forward!
3. Do you have a thinking partner?
Third, your advisor should be your thinking partner when it comes to adding or deleting investments from your portfolio.
Every investor faces decisions from time to time on whether to change a certain investment fund in their portfolio.
How do you know when is the right time to make a change? What is your decision framework for making big investment changes? What is the tax impact of the decision? For most investors, the framework is largely emotional.
Your advisor should be your thinking partner when it comes to investment changes.
A fiduciary financial advisor will be able to help put investment decisions into proper context and bring the decision back to you and your financial plan rather than your emotional opinion of the investment.