As a result of history, we’ve been led to believe that basically everyone who starts investing must have some kind of financial advisor. This is largely due to the fact that most investors in the past were people who could afford to invest – which meant both paying extremely high costs per trade and finding a stockbroker. These investors would gather their information about stock prices or new investment ideas through newspapers, radios, or other media – like we do now. But, in the days before the internet, having a live person who would actually execute your trades or provide you with strategy was an imperative factor in an individual’s ability to invest. For this reason, many people typically assume that investing still requires a financial advisor. The truth, as you might understand it now, is actually far off from this assumption. Today, we are lucky enough to be able to follow stock prices in real time with the help of the internet. We experience fewer delays and we can execute our trades by ourselves, without the need to consult or work through another person.
While this is not to say that financial advisors are a thing of the past, it does mean that the decision to have a financial advisor (or not to have one) has become entirely our own. To that effect, we have compiled a list of the top three biggest concerns that new investors have when deciding to invest with or without a financial advisor.
As we have already mentioned, you absolutely do not need a financial advisor to begin investing – even as a new investor. But, you may decide that you want one. To make this decision, you should probably start by thinking about the key advantages of having an advisor. People usually find that the two biggest services that a financial advisor can provide are knowledge of investments and time commitment to their portfolios. Ask yourself, what would these benefits mean to you? If you are someone who can commit to reading up on investments and various investment styles and taking the time to monitor or change your portfolio, you might decide that you may not really need a financial advisor. But, if you really have no interest in stocks or simply have no time to make periodic changes to your portfolio, finding an advisor might be a smart step for you. Essentially, this is a personal decision and you should not be scared to start investing either way!
The cost of hiring a financial advisor can definitely be a prohibitive factor for some investors. Indeed, the costs of finding a good financial advisor can be pretty high. Some advisors require asset minimums that may not be within your reach, either. However, millennials have found ways around these kinds of costs by talking to advisers who charge only by the hour – meaning, without flat service fees – or even through robo-advisers. Robo-advisers, such as Boon Investments which you can explore through DriveWealth, are a class of financial advisers that provide financial advice online through the use of algorithms. These have proven to be generally less costly alternatives for investors who are looking for advice, but without the expensive costs!
On the other side of the decision-making process are investors who may want to seek advice, but do not know which advisors they can and cannot trust. Obviously, this fear can be a serious deterrent from finding a financial advisor. While all advisors are different, there are some common traits that you might want to see when you seek out an advisor. First, consider how the advisor is paid, how willing the person is to sit down with you and discuss your investments, and the thoroughness of his or her plans for your portfolio. You may also want to look for some kind of credentials or hear reviews from other investors who have previously worked with the advisors that you are considering. These things can all provide insight into an advisor’s track record and personality. The bottom line is that you want to put your money in the hands of someone trustworthy – someone who has your best interests in mind.
In our discussions of these common concerns, we hope that we have been able to shed some light on the decision-making process that many investors use when deciding to hire financial advisors. Remember, whether you use an advisor or you don’t, you can still invest your money wisely. Really, financial advisers and robo-advisers are just more investing resources that are open for you to use, should you decide to do so!