Plenty of self-guided investors go on their financial journeys without a helping hand from an advisor or financial planning pro. Undoubtedly, it can be pretty tempting to put on your DIY cap when you’ve been in the investment game for a while. And while it may seem like a quick, easy, and smart way to save yourself a few thousand dollars per year, I’d strongly urge investors to be aware of the potential bumps in the road they may not expect.
Also, given how smooth the upward bull market has been in the past two years, you may think “more of the same” will be in the forecast for the second half of the decade. Though there’s no way to know for sure, I do think it’s a mistake to assume the path forward will be anything like the one behind us.
Bull markets are easy to navigate through. But can you do it alone when the bear market emerges from the cave?
A bear market—like the one that dragged down tech stocks two years ago—could happen again and at any time. And while the 2022 bear market, which set the stage for the AI boom in the very next year, is now a distant memory, do understand that even the brightest, seemingly unstoppable tech titans can be crushed. And when they are hit hard, it’s vital to know how to react. Often, investors will react based on emotion, selling stocks at cheaper levels while plowing cash into bid-up, perhaps overbought safe-haven assets.
Indeed, if you’re not well-versed in navigating bear markets in addition to bull markets, you may wish to think twice before axing your financial advisor, especially if they’re continuing to bring a lot to the table. It’s not just investing where financial advisors can help you get in the financial fast lane; they can help you find the right budget and even help you navigate the complex world of taxation.
For most professionals who aren’t in the finance industry, delegating such financial tasks to an advisor can be a wise move. It doesn’t just take a lot of time and know-how to handle the tasks an advisor would have taken on, but it also takes the right temperament. If you have any doubts about how you’d feel and what you’d do when the market tumbles 10%, 20%, or even 40% from here, perhaps getting rid of your guide isn’t the best call.
Time to have a conservation with one’s advisor
Of course, if you’ve been in financial markets for many years and aren’t inclined to think you’re a “genius” because you got into stocks at an opportune time (let’s say at the end of 2022), perhaps going it alone can be an option. Either way, I’d have a sitdown with one’s advisor to ask them some very difficult questions. At the end of the day, they need to prove they’re worth the flat fee or percentage you’ll pay.
If you think they’re not worth spending 1% on, do negotiate with them either to lower their fees or to get them to convince you they’re worth the price of admission. It’s nothing personal, just business. And it’s their job to prove to you that they can pull enough weight to justify keeping your business.
Specifically, I’d ask them what services they can offer that you can’t now do yourself. Do they have a game plan for a bear market? Can they help you keep calm during corrections? If they can help you not panic sell in the face of a nasty sell-off, I’d say their service is well worth paying for.
In any case, shopping around for a better, perhaps lower-cost advisor also makes sense. Not every advisor is the right fit for everyone. If one seeks more of a hands-off approach, perhaps there are better options elsewhere that charge far less than 1%.
Top Gaining Stocks
Top Losing Stocks