The biggest mistake most people make is thinking, “Well, why on Earth should I hire a financial advisor when I can manage my own money for free? There’s a ton of information and advice on the internet.”
Hi, I’m Bradford Ferguson, and I get it. The internet is good for a lot of things and we do so many other things ourselves. Why would this one thing be different?
But let me ask you, are you confident that you can avoid doing making costly mistakes, like selling out after the market plunges, chasing hot stocks, or trying to time the market? And, sure, you might be able to learn how to invest, which investments to pick, etc. But do you have the time to do so? Does that sound like fun to you? Odds say that the answer to all three questions is no. I don’t know anyone whose dream growing up was not only to make money and amass it, but also spend every waking moment managing it and worrying about it. And if you keep thinking that you could and should do it yourself, you could end up losing everything you’ve worked so hard to achieve. Because when the pressures on, mistakes carry a heavy cost.
However, if you do hire a financial advisor to manage your money, you can throw out the research and spend your time in pursuits you find more fun. Studies show that you will actually get better returns, too. The average financial advisor charges around 1 percent of your total assets per year. But studies have shown that investors who use an advisor make an average of two to three percent more per year.
Why? For one, they’re professionals. This is their wheelhouse. For instance, in the case of a Chartered Financial Analyst charterholder, like myself, I had to pass three rigorous, six hour exams covering investment theory, ethics, financial accounting, and portfolio management. The CFA institute estimates that it requires at least 250 hours of studying to pass one of the exams, so that’s around 800 hours total. It would be extremely difficult to replicate that on your own, and that’s not counting my years of experience.
Beyond that, an advisor can help keep you from making those mostly mistakes. They offer something called behavioral coaching. This might be the least tangible of their services, and hmm… maybe the most valuable. A financial advisor can help keep your fears and emotions in check.
So let me ask you, do you really still see the value in doing it yourself? Are you willing to risk your future security to save a buck, or do you want to hire an advisor and earn more than you will spend--and gain free time and peace-of-mind in the process!
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