The Value of Investing with a Financial Advisor Instead of a Do-It-Yourself Approach
Paying fees for professional investment management is something we’d all 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 beat 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, you may want to consider a pro. Even passive investors can benefit from advice from an investment professional.
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.
“Buy low, sell high” is the mantra for any 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 ups-and-downs of the market without buying or selling at the wrong time.
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. Along with the assistance of your tax attorney, professional advisors will help you maximize your after-tax returns without paying too much (or worse, not enough!) to the government.
Lastly, the best value from working with a professional advisor 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?
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2022 Advisor Websites.