If personal finance is difficult for you, carefully hire a good financial and investment adviser
A previous financial article, “The Solution – ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that investors are much better off with a well-considered financial plan. A stable set of financial beliefs can help you to keep focused and on track throughout your life. This follow-up article discusses how important it is for people to be careful when they select a financial advisor.
If you realize that you need help with your personal financial planning, get a good financial advisor.
However, be very, very careful with your financial advisor selection process. A good financial advisor could make things much better. A poor one could make things much worse. (See: Financial advisor costs and the value of their investment strategies determine your return on investment from these investment advisor services)
Competent, self-directed investors may have less need for a financial advisor, when they adhere to financial planning strategies and investment funds purchasing practices that are similar to those summarized in The Skilled Investor’s “Financial Decision Rules” articles category. By already following more optimal investment returns strategies, they may find it more difficult to justify the cost of a financial planning and investment advisor.
In contrast, individual investors may repeatedly cost themselves substantial sums by making behavioral errors, and these investors could benefit from the assistance of a good financial advisor. For them, the cost of an advisor may be easier to justify, because of their personal finance inefficiencies. Investors with investment behavior problems might pay the advisor’s costs and still come out substantially ahead relative to having done more poorly on their own. (See: Value-added and value-diminishing investor activities and What is the cost to individual investors of sub-optimal portfolio diversification?)
If behavioral control is difficult or implementation is confusing for you, then you should carefully select and hire a good advisor. You will still be the ultimate decision maker, but you can empower your financial advisor to try to keep you in bounds, while you listen seriously to his or her advice. However, if you do decide to hire a financial planning advisor and/or investment advisor, do not take this advisor selection process lightly. The financial advisor you choose could help you to make or break you lifetime financial plan. The Skilled Investor has [...]