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5 Signs You Don't Need a Financial Advisor To Help You With Financial Planning


Sometimes, when trying to figure out whether to hire a financial advisor, people will ask, “Why do I need to hire someone to help me with this?  I could do all of this on my own.”  That’s a valid question, and one worth looking at. 

The truth is, while everyone should incorporate financial planning into their lives, not everyone needs to hire someone to help them do so.  Interestingly, I’ve met many clients who are truly capable of doing every bit of the work that we do for them.  But instead of questioning the value of our relationship, they appreciate the fact that their finances are not something they ever need to worry about.  They see our fee and the time that we invest in our meetings as a very low price for the ability to spend the rest of their time doing the things they want to do.   

If you’re still researching the financial planning field, you might be trying to figure out whether it’s worth hiring someone.  Certainly, there is a wide range of service offerings to choose from.  Instead of writing an article trying to convince everyone to hire someone, I figured I’d write an article to a different audience.   

This audience is filled with people who feel like they’re well enough on their own, but are trying to figure out what they’re missing by not hiring a financial advisor.  Ironically, those people might not be actually missing anything.  They might be doing just well enough on their own.  And no advisor, regardless of how good they are, will be able to add value to their client’s life if the client perceives there is no value to add.   

Reason #1:  You have a strong passion and interest for managing your own finances. 

Some people LOVE doing things themselves.  Everyone has that neighbor who could hire a lawn service, but who spends so much time on their lawn and their landscaping.  That neighbor who keeps track of everything on a calendar:   

  • When to mulch 

  • When to spread fertilizer 

  • When to spread pesticide 

  • When to change the watering cycle between seasons 

Then there’s the rest of us: so focused on everything else that’s going on in our lives, that it feels like we’re barely treading water.  For example, my wife and I just realized (in August) that we were supposed to mulch our landscaping in the spring.  Now, it’s too hot (being in Florida), so we’re resigned to doing it in the fall.  Maybe. 

There’s the financial equivalent to that, albeit less obvious to the neighbors.  There’s the person who has a spreadsheet for everything:  their spending, their savings goals, how much money they need for retirement, etc.  And with free consumer-oriented software like Mint, you don’t even need to be a spreadsheet genius to do this.  You just need to have the time and energy to stay on top of things. Consistently. 

Reason #2:  You have the time and energy to stay on top of your financial planning needs. 

Funny thing about that lawn-oriented neighbor.  They have the same 24 hours in a day as everyone else.  But they MAKE the time to spend on their lawn.  Their enthusiasm means that no matter what happens, their lawn is a priority in their life.   

I like digging in the dirt (not really, but let’s pretend that I do).  I like keeping a nice lawn.  But every weekend?  I’ve got a teenage son who’s perfectly capable of pushing a lawn mower.  Plus, we live about 30 minutes from the beach…on a nice day, we’d rather take the family there.  Oh, and we have Boy Scouts, swim meets, and everything else that fills in our time. 

Bottom line is this:  Regardless of whatever else is going on in your life either financial planning floats to the top of your to-do list, or it doesn’t.  If it is something you carve time out of your busy scheduled to do (and properly, to your standards), then you might not need a financial advisor now.  But when you feel things starting to slip, and those financial tasks start getting pushed further and further out, then you might want to look at hiring someone. 

Reason #3:  You love managing your own investments and doing your own investment research. 

Either you love this or you don’t.  While this seems very similar to #1, it is slightly different.  You can love balancing your credit card statement every month and dread the thought of managing investments.  Perhaps you’re great at socking away money, but don’t know what to do with it.  The point is, you can manage your day-to-day finances to the penny and still find value in a relationship with a good financial advisor. 

But, if you find yourself comparison shopping for the lowest-cost index fund, or you take your teenage son to the annual Bogleheads conference to share your passion for investing, you might not need a financial advisor.  In fact, you might have fundamental differences in investment philosophy which would actually be counter-productive to a good advisor-client relationship. 

An advisor-client relationship works best when: 

  • The advisor is very clear in their investment philosophy, and 

  • The client understands, and agrees with the investment philosophy 

If you think that you’ll spend more time questioning why the advisor picked XYZ fund instead of ABC fund, then you probably don’t need an advisor.  Especially if you don’t mind doing ALL the work yourself. 

Reason #4: You like filling out account paperwork, doing your own tax planning, and other tasks most people would consider to be mundane. 

It’s easy to overlook all the paperwork and reading that’s involved in managing your own finances.  For example, when you’re discussing the intricacies of a back door Roth IRA conversion, or evaluating the things you can do to tighten up your estate plan, you can read a million articles.   

But to actually do ANY of these things usually requires delving into the tedious details.  Paperwork.  Phone calls.  Sitting on hold, waiting for someone from the insurance/investment company to pick up.  Thinking of all the different estate planning aspects of your life…then hiring an attorney to actually write out your estate planning documents to reflect what you want.  All of these are things that take time, and admittedly for most people, slip through the cracks.   

If you never miss a deadline and can remain on point with all the minutiae, then you might not need a financial advisor to help you keep on task. 

Reason #5: If something happens to you, all the important people in your life are fully prepared to do things EXACTLY the way you would. 

One time, I went to a prospective client’s house.  To his credit, he meticulously maintained his finances in every way outlined above.  While I probably could have helped with a couple of tax strategies, the advice I would’ve given him really wouldn’t have had much impact on his net worth.   

When it came to his estate plan, he told me that he had that covered too.  Then he proceeded to pull out a thick white binder and told me that if he got hit by a bus, all his wife would have to do is ‘break glass,’ and follow the instructions.  While he might not have needed a financial advisor, the mortified look on his wife’s face told me all I needed to know. 

Conversely, I had a client who very efficiently and effectively managed his family’s finances his entire life.  When he developed terminal cancer, he hired me to help ensure that when he was gone, someone was looking out for his wife’s best interests.  My client recognized that while she was grieving, his wife might need someone to help her manage all the things that he used to do on his own.  He might not have needed a financial advisor either, but he was a little more in tune with his wife’s uncertainties than the first guy.   

Just because you’re sure that you’ve got all the bases covered, you can’t assume that your loved ones feel the same way.  Perhaps they don’t have the confidence you have.  Perhaps they don’t have the same interest you do.  Maybe they want to hire someone to take care of all the details so they can enjoy the things they love. 

But, if everyone in your family is comfortable in knowing that they only need to ‘break glass’ and follow the instructions, then perhaps you don’t need to hire a financial advisor.    

Conclusion 

Not everyone needs to work with a financial advisor to achieve their financial goals.  While financial planning is very important, it’s perfectly possible for people to do this themselves.  All it takes is the time, energy, education, passion, diligence and dedication to do a lot of the work yourself.  If you do, great!  If not, then it might be worth looking to see how working with a financial planner might be of benefit to you. We can work through all of it with you, schedule a free consult now 

 


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