Think You Don’t Need a Financial Advisor? Read This First.

Good Luck Investing on Your Own. A few things to consider before you decide you don't need a Financial Advisor

I am writing this note to wish a safe journey to all those folks who have decided that they can safely invest their money without the assistance of a professional Financial Advisor.

I get it.

Why pay someone to do something you can clearly do yourself?

All the information you need is at your fingertips. You can trade your account for pennies.

Before you begin, please allow me to bring a few things to your attention.

You’re Betting on Yourself

When you decide to invest on your own, without the benefit of a Financial Advisor, you are betting the family fortune that you are good at it.

You will discover that investing your own money is a lot like representing yourself in court.

You save the professional fee right up until you understand why there was a professional fee.

You will be both the investor and the Advisor.

That’s an inherent conflict.

There’s nobody standing between you and the button.

Information Is Not Wisdom

Be aware that information is not wisdom.

People who have investing shows on television are entertainers, not Financial Advisors.

It is impossible to invest for growth without risk.

How much risk are you willing to take?

The Market Doesn’t Wait Until You Feel Comfortable

In the last century, the United States weathered World War II, the Korean War, Vietnam, the Depression, the Tech Bubble implosion, 2008, many recessions and panics, oil price craziness, and on and on and on.

The Dow Jones Industrial Average went from 165 to 54,000.

A lot of people lost money while the Dow went from 165 to 54,000 because they acted only when the time felt right.

Yesterday’s Winners Look Awfully Good

It feels good to chase near-term performance.

Yesterday’s winners always have the most convincing stories.

Buying financial products on the internet without a Financial Advisor’s advice is like buying prescription drugs on the internet without a doctor’s advice.

The Math Can Be Unforgiving

A $10 stock that falls 60% will be at $4.

If it then goes up 60%, it’s now at $6.40.

You’re still down 36%.

Losses and gains are not symmetrical.

Think about that.

You Won’t Know You’re Emotional

You won’t realize you are emotional when you get emotional.

You will confuse fear and greed with prudence and opportunity.

Panic will feel like common sense.

One of the great values of a Financial Advisor is that when you become emotional, your Advisor doesn’t have to become emotional with you.

Sometimes Doing Nothing Is Doing Something

In down markets, you’ll feel like you should be doing something, even though doing nothing may be the best strategy.

That can be a very difficult decision to make when it’s your own money and everyone around you is telling you to act.

Confidence Is Remarkably Persuasive

You will meet people who sound smarter than you.

You will want to act on their advice simply because they sound certain.

Confidence is remarkably persuasive.

Eventually, you’ll face something you’ve never experienced before, and you’ll have no idea what to do.

And One Last Thought

Just because you use money every day, don’t think that means you can make your own investment decisions.

That’s a mistake.

As my friend Mark says:

“Whenever I get a haircut, I sit in the barber chair and watch the guy cut my hair. I’ve seen him do it every month for my entire life. Do you think that means I’m qualified to cut my own hair?

Of course not!”

Bon voyage.