Do I Need A Financial Advisor Or Should Invest on my Own?

As an investor, you should have two primary goals. First, you should be looking for ways to grow your wealth. Second, you need to always have an eye on planning for your retirement. That is critical because your ability to generate working income during retirement will very likely be limited.

As you ponder your investment strategy, you will need to answer one very important question: Do I need a financial advisor or can I invest on my own?

Advantages of Hiring a Financial Advisor

If you were to decide to rely upon the advice and help from a Montreal financial advisor, you would only want to do so because it benefits you. If the benefits don’t outweigh the cost, it wouldn’t make much sense to go in this direction.

So, how could you benefit from sound financial advice?

The Time Factor

Given what is at stake, you wouldn’t want to be handling your own investment research and decisions if you have time limitations. To be an effective investor with a decent size investment portfolio, you need to allocate a certain amount of time and effort to actually managing your portfolio. Since diversification of investment assets is highly recommended, it means you would need the time to research multiple research options and make multiple decisions.

If you really don’t have enough time to do right by your investment portfolio, you would be better off putting it into the hands of an investment professional. Assuming they are working with the optimum number of clients, they would have the tools and time to monitor your assets and make timely decisions.

Access to Information

As professional investors and advisors, the people in this profession have access to investment information and options that aren’t ordinarily available to the regular investment public. This might include new stock and bond offerings, investment options that are new, and important information about current investments that demand immediate action.

It’s also a good bet they have access to expensive investment research tools that you might not be able to afford. You can never underestimate the value of technology and timely information when it comes to investing money for retirement and improving wealth.

Investment Experience

It should come as no surprise that it takes a lot of education and training to learn how to properly invest. It’s not something you can pick up on a weekend.

With an adviser on your payroll, you would benefit from someone who has expertise in multiple areas and with multiple types of investments. They are trained in techniques related to things like how to create diversified portfolios, risk/reward analysis, how to make timely trades, technical analysis, and fundamental analysis.

The Primary Disadvantage of Using a Financial Advisor (The Cost)

It’s quite possible you might not be able to afford the hiring of a professional investment adviser. That would especially be true if you have a small to moderate investment portfolio. It really might boil down to how your chosen adviser was wanting to get paid.

FYI: Investment advisors usually get paid under one of three models:
• Commission: a common way an investment will be paid is often commission based
• Hourly: similarly, to many professions, an investment advisor be (assuming they accept) on an hourly
• Percentage / flat rate: A percentage of the investment portfolio managed or flat ongoing amount

Investing on Your Own

The question of whether or not to invest on my own warrants serious consideration. If you cannot afford an advisor, the decision has already been made for you. If you could afford an advisor but still want to invest on your own, we would suggest you consider the following information.

Given the amount of time and effort you would need to invest to become an effective investor, it should be something about which you have an interest. If you are interested in becoming a good and effective investor, it will increase the chances you will stay focused on your portfolio and learning how to invest.

One of the first things you would need to do is to determine your investment goals. You need some kind of investment plan in place to help direct your investment decisions. Also, you would need a basic understanding of risk/reward concepts. Finally, you would really benefit from acquiring software to help you with your research, analysis, and portfolio monitoring.

If you can do these things and keep from getting overly emotional about managing your investment portfolio, there is a good chance you could succeed. There is also a good chance you would enjoy the process of increasing your own wealth and getting ready for retirement.

Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a professional advisor for individual financial advice based on your personal circumstances.
The views and opinions expressed herein are those of the author and do not necessarily represent the views or opinions of Assante Capital Management Ltd. and its affiliated companies.