It may sound a good idea to save some money and manage your own investments – why pay ‘all those fees’ for experts when you can do it yourself?
Those sentiments can often come back to haunt DIY plumbers or ‘home car mechanics’, who may end up with a worse mess than the initial problem!
So, are you as honest as 87% of people who suggest they have recognised that they don’t have the necessary ability to manage their own finances and investments without help?
This is what a Charles Schwab survey suggested and that most people recognise the value of seeking advice, as reported by FT Adviser last week.
The survey from the multinational financial services company found 81% of retail investors believed it was increasingly important to seek expert advice, while 58% are in fact consulting financial advisers.
That is a seven percentage point increase from the year before and meanwhile, 52% were referring to the financial press to make investment decisions.
According to Charles Schwab retail investors are moving away from previously popular sources of investment advice such as ‘finfluencers’ (financial influencers), celebrities and social media-based finance specialists and towards more traditional channels such as financial advisers and investment publications.
Our questions would be: Do you have the systems, can you access all the asset types you may want, do you have the time and wherewithal (and the desire, let’s face it!) to be able to be the sole manager for your investments?
What about cost economies, access to market information, administrative systems, knowledge, expertise and experience…?
How are your emotions – can you rationalise your decisions and appreciate the patience which is so often needed, as well as sufficient confidence to buy when it looks awful and high risk and when others may be selling and selling when others may be buying when they believe euphoria is a permanent condition?
It’s also worth noting that a report from the CFA Institute, a global association of investment professionals, is calling on financial regulators to engages with these ‘finfluencers’ and make them aware of the many rules and regulations surrounding giving financial advice.
The industry is heavily regulated – and rightly so in most cases, since there is so much at stake.
The CFA is also calling for influencers to be required to disclose their regulatory status – ie, do they have any official sanction at all?
As with the plumber or car mechanic, financial advisers spend a great deal of time training, learning on the job and gaining invaluable experience – which cannot be replicated by reading a few articles online or watching videos.
If you genuinely feel you have the knowledge, expertise and time to devote to all of the above, not to mention a cool head, we wish you all the best in your financial endeavours.
But if you are uncertain, please secure proper financial advice – and please don’t use the internet as the sole source of your information!