Key Takeaways
- Doing your own financial planning comes with risks that can prove to be quite costly as your finances grow and become more complex.
- Starting off in life with a robo-advisor or digital platform to do your own financial planning is fine, especially when you have limited resources, but make sure it’s a reputable company.
- As your finances grow, starting a relationship with an actual financial advisor is a great idea as they can get to know you and your needs and tailor a plan specifically to you.
You’ve probably heard the saying, “The doctor who treats himself has a fool for a patient.” And in many areas of life, especially health and finances, this saying applies. Money is one of those areas where if you are your own financial planner, doing it all yourself, many times, you are going to make mistakes. Not because you aren’t a smart person, but because you don’t understand all the ins and outs and you are too close to the issues.
My partner is my financial planner. I have other advisors that I bounce off ideas and get advice from as well. You might think, “Gee, don’t you know your business?” Of course, I know my business! But again, going back to that saying and applying it here, a financial planner who plans for himself has a fool for a client!
Do you need a financial planner? Yes, but perhaps not right away. If you want to do it yourself starting out in life, that’s fine, but at some point, things get more complex. You’ll eventually reach a point where you just can’t seem to pull all the pieces together, and that’s when mistakes happen. When you are starting off in life, and you don’t have a whole lot of money, these mistakes don’t make much of an impact. But as you grow and progress, and you make more money, these mistakes with larger amounts of money can really hurt.
At the point where your finances start to become more complex, you want to hire a professional financial advisor to help you. You should look for the following things in an advisor:
- Are they credentialed?
- Do they really listen to you, or are they talking at you?
- Do they understand you and your needs, or are they pushing a cookie cutter plan on you that they give to all their clients?
- Are they customer based, or are they transaction based?
You might start off with a digital relationship with one of those robo-advisor services out there, especially if you have limited resources, just be sure the service you use is reputable. You could slowly progress to a full-time relationship with an actual advisor once you have the resources. This relationship allows your advisor to really get to know you and your needs, and thus they will better be able to help you make smart decisions about your money.
Until next time, enjoy!
Gary