Should I Manage My Investment Account or Use a Financial Advisor?

June 02, 2011

If I had a dime for every time I heard this question – I would have a lot of dimes! This is actually one of those questions I feel shows that an investor has entered the introspective phase of their investing life. The good news here is that the sooner you can answer this question, the quicker you can get on with the business of putting your money to work for you!

So where do you start? You need to be honest with yourself by asking whether or not you have the time to devote to managing your money. This does demand a lot of time, not so much once your portfolio is implemented, but more so in the homework of the right investments for your financial goals. That brings you to the second question you need to answer; how confident are you in your investment knowledge and the subsequent ability to turn that knowledge into a well thought out and manageable financial plan? If you didn’t answer in a resounding manner (YES, I have the time and I KNOW how to construct a financial plan), then here are some triggers that a financial advisor might be in your future:

Lack of time: Probably one of the biggest reasons to seek out an advisor is simply because you either don’t have the time or choose not to spend your “free” time researching and monitoring your portfolio(s). Heck, when my wife and I retire I don’t plan on spending my time managing our money!

Tendency to procrastinate: I was going to mention this earlier but I kept putting it off. Believe it or not, even if you know all the right things to do to manage your portfolio, if you never get around to it you are not helping yourself.

Uncomfortable making investment decisions: This one is right up there with not having enough time. If you are doubtful of your decision making, that will inevitably lead to either not doing anything or being too afraid to make investments.

Lack of discipline: I have run into many people that professed to knowing what to do in managing their investments, yet upon reviewing their portfolio and how they bought/sold investments, I often would see that they had no “game plan” that they stuck to when investing. More often than not, they would buy and sell sporadically (often at the wrong time).

So if any of these sound like your situation, it might be time to at least have a conversation with a financial advisor.  If you do decide a financial advisor will be a good investment to your financial well-being, you will want to do your homework on finding a reputable and trustworthy one. A good place to start is by asking your friends and/or family members, who you respect financially, who they are working with. If that doesn’t pan out, check out our resource on How to Choose a Financial Planner and give a quick read to the Pursuit of a Financial Advisor Field Guide from napfa.org, an association of fee only based financial planners.