An Investor’s Perspective

An Investor’s Perspective

I do a lot of thinking about what keeps people from seeking the help of qualified counsel when it comes to their finances.  A few things immediately come to mind.

  1. Fear they’ll be sold something unnecessarily
  2. Fear they haven’t done enough
  3. They enjoy it and just want to do it on their own
  4. They’ve been burned in the past by an “advisor”
  5. Don’t trust anyone

These reasons are the main culprit behind the reputation of most financial services industry.  It’s getting better though.

For the most part, the RIA movement has been extremely positive because they’re not selling products.  Ever improving technology is pushing advisors that were once handcuffed to their firm to strike out on their own to do business another way.

This is a striking difference from the past.  These firms may be compensated as part of portfolio management, but they’re not selling anything and probably don’t have quotas to meet.  This helps with the first reason.

Fearing you haven’t done enough as a reason not to seek help is not a recipe for success.  Ignorance when it comes to your personal finances might be fun for a little bit, but once you realize you’re going to have the live with those results, it becomes less fun.

Many investors in that situation aren’t as bad off as they think.  And even if they are, a good advisor is going to be able to get you on a much better path than having your head in the sand.

For those that fall into the category of “I enjoy it and am just interested in doing it on my own”, I’ll still encourage you to seek out potential counsel.  So many advisory relationships these days are collaborative meaning you can still scratch your itch without taking all the responsibility.

Most people that I talk to that do it on their own, all they are really referencing is the investment portion because that’s the sexy part.  So, if this is you, are you taking the time to do proper estate planning, tax planning, long term care planning, and all other aspects of planning?  A true advisor is going to take the time to help you plan for those items.

If you just like doing the investing, perhaps managing a piece (5% or so) of your portfolio however you see fit might fulfill your interests.  You can still have a guided collaborative relationship with the other 95%.  Few advisors are going to argue with this approach.  Educated clients are typically the best clients.

As for trust issues, there is honestly little anyone can say to help you overcome this fear.  This is a bridge you’ll have to cross on your own.  A great place to start would be to ask people that you respect who they use for their advice.  It’s a bridge to trust rather than trying to find someone on the internet.

To be clear, the idea isn’t to blindly trust anyone.  Bernie Madoff comes to mind.  The goal should be to find an advisor that is wholly transparent.  Meaning that they don’t just show you the data when you ask, but even when you don’t.  Why are they recommending what they’re recommending?

They show you exactly how they are paid and don’t make a thinly veiled attempt to disclose compensation via a booklet of legalese.

The great thing is there are many firms that are adopting the transparent model.  This should make seeking help become much more palatable.

NOTE: I’m not seeking your business, nor am I recommending anyone specifically.  I’ve just seen so many do-it-yourselfers that think they have it all together when in reality, they’ve overlook tons of important issues.  It’s not for lack of effort so many times – it’s just that you don’t know what you don’t know.



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