When it comes to getting professional financial advice, many people believe that you simply can’t go wrong with hiring a financial advisor. However, many people don’t know that you may not need a financial advisor at all! By following a few simple tips, you may be able to manage your finances perfectly well without anyone else’s help.
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You’ll get charged no matter if you make money or not
It’s no secret that financial advisors often charge hefty fees for their services. These fees are typically determined by the amount of money you invest. They are not based on the profits they generate.
In other words, you will still be charged for their services even if they misuse the funds you entrust them with.
This system increases your investment strategy’s unneeded risk and costs. It also provides little incentive for a financial advisor to provide results.
Even if they will get paid more if they can increase your wealth, they still receive compensation in the end. As a result, it’s important to carefully consider whether or not working with a financial advisor is right for you.
Investing wisely in the long-term is better
While there’s no doubt that financial advisors have access to a wealth of information and resources, the truth is that you can do just as well – if not better – by investing in low cost index funds for the long haul.
You could invest in individual companies, but you must take the time to do your own research and invest long-term. You can find out which companies will likely succeed in the future and invest in them accordingly.
We personally love investing in the Total Market Index Fund and the S&P 500. They which have a proven track record over the long term.
What’s more, by investing by yourself, you’ll avoid the fees charged by financial advisors. This will allow you to keep more of the profits you generate, giving you a greater return on investment.
M1 Finance is a great investment opportunity with its robust yet simple app. There are ZERO commissions or account management fees.
Deposits $1,000 or more into your M1 Invest account within two weeks of signing up and get a cash bonus of $30-$500 to that account.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using M1 Finance to open a brokerage or retirement account! M1 Finance can undoubtedly help you on your financial independence journey.
You might not get the personalized attention you need
If you’re working with a large financial institution, it’s essential to remember that you’re likely just one of many clients they’re managing.
As a result, you may not receive the personalized attention you need to make the best decisions for your financial future.
On the other hand, if you’re working with a smaller firm or an independent financial advisor, you’re more likely to get the one-on-one attention you deserve.
This way, you can be sure that your investment strategy is tailored to your unique needs and goals.
A financial advisor rarely outperforms the market
One of the financial advisors’ biggest selling points is that they can outperform the market. However, this claim is often exaggerated.
In reality, it’s very difficult – if not impossible – to consistently beat the market, even for experienced professionals.
What’s more, even if a financial advisor does manage to outperform the market in a given year, there’s no guarantee that they’ll be able to do so again in the future. As such, it’s essential to be realistic about the capabilities of financial advisors.
Related Content: Investing 101: Mutual Funds vs. ETFs vs. Index Funds
Most financial advisors are learning as they go
Hopefully, you’re sitting down for this one because it may come as a shock: most financial advisors are actually learning as they go.
That’s right – even though they may have years of experience, many financial advisors are still trying to figure out the best way to manage their clients’ money.
With this in mind, it’s important to remember that you may be able to get just as good – if not better – results by managing your own finances.
After all, if your financial advisor is still learning, why not learn alongside them?
The amount of attention they give you depends on how much you invest
The more money you have to invest, the more attention you’re likely to receive from a financial advisor. That’s because financial advisors typically earn more commissions when they manage larger sums of money.
As a result, if you have a small amount of money to invest, you may find that your financial advisor is less attentive than you’d like.
If you’re considering working with a financial advisor, this is something to keep in mind.
You may be able to get the same services for less
Many financial institutions offer their clients various services, including investment management, retirement planning, and tax preparation. However, these services often come at a premium price.
Fortunately, there are several ways to get the same services for less. For example, you can use online tools and resources to manage your finances or work with an independent financial advisor who charges lower fees.
When do you actually need a financial advisor?
You might need a financial advisor if you have more assets than the average person or your situation involves complicated tax issues.
Other times when you might need an advisor include if you’re going through a major life event like getting married, having a baby, or buying a house.
If you’re not sure whether or not you need a financial advisor, the best thing to do is ask yourself whether you have the time, knowledge, and interest to manage your finances on your own. If not, then working with a financial advisor may be your best option.
The Bottom line
Working with a financial advisor can be beneficial in some situations, but it’s essential to understand the limitations of these professionals. In many cases, you may be better off managing your finances on your own.
The average person doesn’t need a financial advisor. You probably don’t have so much money that you can’t keep track of it yourself, and you’re probably not in a complicated enough financial situation to warrant the help of a professional.
DIYing your finances can be a great way to save money and better understand your financial situation. So, unless you have a complicated financial situation or more money than you know what to do with, you’re probably better off without a financial advisor. 🙂
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
