Why You Should Be Your Own Financial Advisor
While having your own financial advisor is generally a wise choice, sometimes, finding the right advisor might be a real challenge. It is, therefore, easier to learn how to do it yourself.
Here are the top reasons why you should consider being your own financial advisor.
You will save money
Getting financial advice, even if you find someone who charges significantly less than the average price, is a really expensive thing. If you have a bit more money in total, it is not uncommon to pay your advisor over $800 a month. If you spend $10,000 annually, it adds up.
Were you to invest that money into something and get an 8% growth, after 30 years, you would have $1.2 million, which is an early retirement type of money. It is not uncommon to pay a lot more money than that.
It goes even further if your portfolio is already at 2 million dollars; you are actually paying your advisor 40,000 dollars a year + commissions and fees. When all of this adds up, one really starts to wonder whether or not they should take full control over their finances and simply do away with the advisors.
“A penny saved is a penny earned.”
Well, realistically, you will probably not do better than the advisor, and hiring one can mean a lot of money for you, especially if you are a high-income professional. However, there is no need for you to outperform the advisor. You don’t even have to be as good as he is. As long as the difference between the money you make and the money he makes is lesser than what his fees would cost you, you are in the green.
You will eliminate the possibility of your financial advisor ripping you off
While nobody ever believes that it will happen to them, there is a minuscule chance of your financial advisor ripping you off if you do not pay attention to what he is doing. There are real advisors who would never do that, but unfortunately, there are self-styled “advisors” that can be both crooked or simply incredibly bad at what they do.
The world still remembers the money Bernard Bernie Madoff made off with. Sure, you will make mistakes with your money, but those mistakes will not have that bad of a consequence as they will be innocent mistakes. Remember to learn how to do it properly before taking your finances over.
You won’t have to learn how to recognize a decent advisor
Recognizing a competent advisor can be incredibly difficult even if you do have a full insight into his history. To understand what the information they are presenting you actually means, you will have to learn a lot. If you do hold enough knowledge to evaluate an advisor you’ve never worked with properly, you most probably do not need one. In general, just using the same advisor as your dentist might not work out as a plan after all.
You will not have to go through the process of changing your advisors
Sometimes, even if you have found a good advisor who takes care of your finances the best that he can, it simply does not work out. When that happens, you will most probably have to fire the advisor and then go through the process of finding a new good advisor and evaluating their work. If they do not work out, the process just repeats itself over and over again. Finding an advisor that feels like a good fit is incredibly difficult and will take a lot of your time, which leads us to the next point.
You will not have to spend hours on meetings with your advisor
Meeting with your advisor can be a tedious thing that takes half of a working day when you calculate the traffic, parking, getting to the meeting, and coming back. In those meetings, you will either not know enough to follow the conversation, and thus simply let the day go to waste, or you will take your time to learn what you need to know to participate in the conversation. If you have already learned enough for that, you are decently close to having the understanding needed to become your own advisor. You don’t have to know as much as the advisor does in any way. You only need to know the stuff that directly applies to your life, while they need to know everything that can relate to any of their customers.
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