facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck
%POST_TITLE% Thumbnail

7 Reasons to Stop DIY Investing and Hire a Financial Planner


Are you frustrated not knowing if your investments are returning enough for the retirement you want? Do you wish you had a crystal ball that could show you what your financial future could look like? That's the idea behind creating a comprehensive financial plan. No, financial planners don't use a crystal ball to see into the future. If you're working with someone who claims to have one, that would be the first sign to look for someone else better equipped to help you! Financial planners, however, can create a model of what your finances may look like in the future.

Often when I have an initial conversation with a client, I like to begin with the difference between financial planning and investment management. Many times people believe they are one in the same. In reality, investment management is simply a part of the comprehensive financial planning process. It is, however, an important part, and often where do-it-yourself (DIY) investors make their biggest mistakes. If you've been considering working with a financial planner, here are seven reasons to ditch DIY investing and work with a financial planner who can provide professional portfolio management.

7 Investing Reasons Why You Need to Hire a Financial Planner

A financial advisor can help you avoid the many pitfalls of DIY investing, including:

1. Removing the Urge to Trade on Emotions

Chances are, at some point you've probably become more than a little emotional when thinking about your money. And when it comes to investing, listening to these emotions more often than not can end badly. It takes a particular type of person to be able to put aside their personal feelings and make the right decision every time when it comes to their own finances. A financial advisor is free of those emotional attachments and is able to look objectively at what is best to achieve your long term goals.

2. Failing to Employ a Disciplined Process

Hunches, tips, and following your gut rarely work out as an investment strategy in the long run. However, choosing and sticking to a proven investment strategy can make achieving your financial goals much more likely. Your financial advisor has an investment strategy he or she believes in and will stick to over time, so you won't gamble away achieving your goals by acting impulsively over a gut feeling or a rumor.

3. TRYING TO CALL TOPS AND BOTTOMS

We've all heard the "Buy-low, sell-high" mantra, but attempting to call the tops and bottoms of a volatile market can result in short term decisions that can negatively impact your long term objectives. A financial planner realizes that it is virtually impossible to know exactly the best time to get in and out of an investment, especially when it comes to specific stocks. Even with stock mutual funds and ETFs, which hold a group of stocks, it is a guessing game on what direction they will take from day to day. Keeping you focused on your long term goals and not trying to squeeze every penny from a stock trade is a key reason to work with a financial planner.

4. Avoiding REBALANCING a Portfolio

Selling a well-performing asset to buy another financial asset which is under-performing is crazy, right? Well, actually, it is the ultimate buy-low sell-high strategy. Most DIY investors are reluctant to make such seemingly counter-productive moves, often choosing to sell the losers and let the winners run. Your financial planner will employ a regular rebalancing strategy which sells some of the appreciated assets to purchase the cheaper, under-performing assets, when the portfolio drifts too far from the target set during the planning process.

5. Putting All Your Eggs in One Basket

Investing in what you know is a common approach to DIY investing because people feel like they have more knowledge than the average person in that particular area. This often happens when someone invests in the company or the industry sector in which they work. The problem with this approach is your portfolio is not diverse enough to offer much stability. A good financial planner will make sure that your investment strategy is well diversified to reduce risk and smooth out investment returns over the long run. 

6. Selling When the Market Gets Scary

The market is down significantly from it's highs, and your portfolio is in the red. Do you stick with your investment strategy? Most DIY investors don't and wind up not only selling their investments for a loss but missing out on the rebound. Financial planners help keep things in perspective for you by focusing on your long term goals. They remind us that corrections in the market are normal and make sure that we are well-positioned to ride out those corrections by investing for the long term and having solid savings in place for the short term.

7. Sleepless Nights

Investing on your own and following the daily ups and downs of the market can be stressful. If the market is up, you are worried whether you should ride the wave as long as possible or take your profit now. If the market is down, it is even worse, as you're always hoping to get back to that market high where you were before. With this approach there is constant worry one way or the other. Working with a financial planner minimizes the importance of the daily uncertainty of the market, lets you focus on your long term goals, and sleep well at night.

Stop worrying about every move the market makes and how you should react. Work with a financial planner to change your financial focus to your long term goals instead of the everyday market changes. Talk with a financial planner about creating a comprehensive financial plan and be secure in knowing that your financial future is on track.

Interested in receiving TriPrescient Insights right to your inbox? Click the link and add your name to our mailing list, and we'll send you an email when new articles are posted.

This content is developed from sources believed to be providing accurate information.  Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.