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When Should I Switch from Managing My Own Investments to Utilizing the Services of a Financial Advisor?

Not every investor feels like they need a professional financial advisor. Many investors feel that they have the knowledge to manage their investments on their own. In addition, some people just don’t want to pay the fees of a financial advisor for something they feel they can do themselves. When it comes to investing, a lot of people say, “I can do this myself. Why would I pay someone for something that I can do on my own?”

Why You Should Work with a Financial Advisor

Many people have the ability to cut their own grass, trim their own bushes, shovel the snow off of their driveway, or complete an easy home improvement project. And yet, many people hire someone to perform all of these tasks. While most people could perform all of these tasks, many of them feel that their time is too valuable to be spent doing them, so they hire a professional to do them, so they don’t have to. The same logic could be applied to your finances. While many investors think they can manage their investments on their own, they may find greater comfort in using a professional financial advisor who has more education, experience, and time than he or she does.

A Financial Advisor can help you stay focused on your long-term investment/retirement goals.

While keeping you focused on your long-term financial goals, a professional financial advisor can also help you determine the proper asset allocation mix (i.e., stocks, bonds, and cash) for your current time horizon and risk tolerance. Also, he or she can help remove your emotions from the investment process and prevent you from buying and selling investments in your portfolio at inappropriate times.  According to a 2015 study performed by John Hancock, 70% of those who work with a financial advisor are on track or ahead in saving for retirement, versus just 33% of those not working with an advisor.

A Financial Advisor does more than just invest your money.

A lot of people think that all a financial advisor does is invest their money.  While that is one of their responsibilities, it is far from being the only one. Financial Advisors can also help you with these other areas of your financial plan:

  • Income Tax Planning
  • Retirement Planning
  • Insurance Analysis/Planning
    • Life Insurance
    • Long Term Care Insurance
  • Charitable Giving Strategies
  • IRA Withdrawal Strategies

A Financial Advisor can free up your Time to do the things you want to do.

As I mentioned earlier, an individual may be able to manage his or her own investments if they have the time, or want to put in the time, to research all of the investment options available to them in the stock/mutual fund/ETF universe.  Most investors do not have the time that is necessary to stay on top of all of the investment choices available to them.  According to a 2013 study performed by Fidelity, 77% of their clients admitted that they didn’t have the time or knowledge to be confident in their investment choices.  Not only will a Financial Advisor set up an investment portfolio that is currently appropriate for a client’s time horizon and risk tolerance but will monitor this portfolio and make any necessary changes to the portfolio as the needs, time horizon, and financial goals of the client change over time.

A Financial Advisor can help you take the emotion out of investing.

Stock market corrections are a fact of life. If the stock market only went up (i.e., no risk), then everyone would invest all of their money in the stock market and there would be no need to diversify your investments into stocks, bonds, and cash. However, stock market corrections are inevitable, and it is the job of a Financial Advisor to stay calm, and to reassure his or her clients, during this time of strife in the markets.  The stock market has recovered from every correction it has ever gone through.  Financial Advisors realize this and help their clients keep a long-term perspective with respect to their investment portfolios during these corrections. If you don’t work with a financial advisor who can remind you that the stock market will go back up (because it has every time), your emotions could cause you to make an ill-advised decision at the wrong time, such as pulling all of your money out of the stock market and putting it into cash.

How DHJJ Financial Advisors Can Help

DHJJ Financial Advisors is a Registered Investment Advisory Firm that has been providing asset management and financial planning services to its clients since 1988.  For over 30 years, our team of dedicated investment advisers has worked closely with our clients to produce unique investment portfolios designed to meet their personalized needs. If you have any questions or are thinking about switching from managing your own investments to utilizing the services of a professional financial advisor, please contact any of the financial advisors at DHJJ Financial Advisors at 630-420-1360 or fill out the form below.