Is DIY Wealth Management a Good Idea?
Posted by Ocean Wealth
With so many resources out there thanks to the Internet, doing things yourself has never been easier. Click a couple of links, and you can learn how to change a tire and cook like Gordon Ramsey (not at the same time, of course). Our digital database is more comprehensive than ever before, so our depth of knowledge has grown significantly, too.
That said, this doesn’t mean we’re suddenly experts in everything. If that were the case, you could diagnose yourself on WebMD and never see a doctor again. It doesn’t work that way, though. You still need certified, experienced specialists. Even though the Internet has made access to information seamless, it’s not always a surefire solution.
When it comes to wealth management, however, there is some debate. Some people believe they can undertake all their financial planning on their own. In fact, DIY wealth management has become something of a growing trend in recent years. We’re here to help break down why it is or isn’t right for you.
Are You Really Saving Money?
On paper, you’re saving money with DIY wealth management. You’re not spending money on hiring a financial advisor and either paying them in a lump sum or hourly. There are savings associated with doing all your own financial planning. If your financial advisor charges 1% and you have a million-dollar portfolio — that’s still $10,000 out of your pocket.
We’ve established the up-front savings, but let’s look a little deeper. Wealth managers can add about 3% in relative return to an individual investor. That’s a pretty significant number on its own and something you need to consider. Sure, you’re spending more money up-front, as we said, but your return will likely be higher with an experienced financial advisor.
Is Your Focus on the Wrong Things?
Knee-jerk reactions are something that often happens with inexperienced investors. They have a few bad months and hit the panic button. While it’s essential to understand your personal limits, you also need to have thick skin as an investor. If you don’t, hiring someone with experience to take on all that unnecessary stress should be a priority.
This isn’t a slight on DIY wealth management, it’s merely human nature. If you lack the experience to deal with the ups and downs of the market, you could be in for a rude awakening. Lacking the proper temperament for wealth management can cause you to make financial planning errors that would otherwise be avoidable.
Can You Put a Price on Experience?
At the end of the day, this is what financial advisors do. This is their primary domain and everyday focus. They're fully equipped to deal with high-stress financial situations that the average person can't. Of course, you have to make sure you’re hiring the right financial advisor as well. You can easily fall into a deeper hole if your financial advisor turns out to be completely incompetent.
We can help you with all your wealth management needs at Ocean Wealth. With a dedicated team full of experienced financial advisors, our goal is to ensure the financial success of all our clients. Contact us today to learn more about how we can help you get started today.