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Financial Planners or Do-It-Yourself: Which is Best?

 Apr 11, 2017 2:00 PM


OK, I confess. I’m biased when it comes to the question of whether financial planners or do-it-yourself investing is best. Hint: I’m siding with the professional adviser.

However, independent research backs me up.

According to several Canadian studies, professional advice positively and significantly affects your investable assets, regardless of your household income.

And there are other benefits to professional financial advice, according to the research:

  • The longer you work with a financial adviser, the more your assets increase.
  • The positive impact on wealth accumulation is due to asset performance, as well as a greater savings discipline acquired through advice.
  • Professional financial advice positively affects retirement readiness and encourages a long-term investment strategy.

Personal Financial Planning: Should You Go with a Pro or Do It Yourself?

Families and individuals usually start paying closer attention to their financial situation—and how to improve it—when their lifestyle changes.

You may have started as a DIY investor at some point. You likely questioned that approach when you married, started a family, landed a new job (or lost an old one), inherited some money, or began caring for a loved one.

Most people ask a number of financial questions during these life changes. How will you fund your children’s education? Will your family be financially secure if something should happen to you? Where will you find the money to finance a new home?

A financial planner can help you answer these questions and put you on the right track to achieve your goals.

Investing is the Last Step of a Financial Plan

In my financial planning practice, I’ve seen many do-it-yourself investors focus on short-term stock market changes, instead of taking a step back to consider their overall financial situation.

Investing is actually the last step in a solid financial plan.

Before you begin maxing out your retirement savings plan or tax-free savings account, ask yourself where you are today and where you want to be tomorrow and beyond. What are your liabilities? Is your debt level reasonable? Do you have a will and the right amount of life insurance? Are you living within your means?

Get a Second Opinion

When you’re thinking about your own life, it’s difficult to answer these questions objectively. A professional financial planner is a good sounding board. They provide a second opinion and help you evaluate if you’re on track to meet your goals.

Many do-it-yourself investors don’t honestly assess how they’re doing when it comes to financial returns. They quickly remember when they bought a stock at $12 and sold it for $22, but conveniently forget the losses that reduced (or eliminated) that gain.

The Cost of Professional Financial Advice

One of the most common reasons people decide to invest on their own is fees. It’s important to know what you’re paying for professional financial advice, yet equally important not to focus too much on the cost.

A financial planner will show you what you’re making after fees are deducted from your investments and encourage you to keep working to achieve your life goals.

The Bottom Line

We’re all busy with jobs and family, trying to maintain a reasonable work-life balance. Most people simply don’t have the time to manage their finances properly. A better option is hiring a professional who has the proper training and focuses on financial planning as a career.

A financial planner will work with you to develop an achievable plan, help you save more money, increase the amount of your investable assets, and help you avoid emotional financial decisions so you’re on track to meet your life goals.

What could be better than that?



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