Investing yourself vs. using an adviser

In a world of amateur investors and ‘fin-fluencers’, it’s important to realise the value of professional advice when investing. This article outlines the key advantages of using a financial adviser opposed to trying to go it alone.

While Kim Kardashian attracts attention everywhere she goes, she recently caught the eye of the US Securities and Exchange Commission and was fined over $2 million for making one of her popular posts.

So, what was the offence? Wearing a dress Marilyn Monroe once owned or wearing too much eyeliner? No, her offence was encouraging followers to invest in cryptocurrency without disclosing she had been paid almost $400,000 for doing so.

The case highlights the problem for people trying to make their own investment decisions and possibly being influenced by a raft of newly emerging so called ‘fin-fluencers’. People who post investment advice online without a licence.

While it’s tempting to go it alone and not seek out professional advice, research suggests do-it-yourself investors are significantly worse off than those who do take the time to obtain quality advice, tailored to their particular situation.

According to a study conducted in 2016 by the US-based Vanguard Investments, financial planners have the potential to add up to three percentage points to the net returns they achieve for their clients.

The study found they did this by embracing various complex strategies including locating lower-cost investments, better managing asset allocations and assisting clients in developing and adhering to financial plans.

These findings were also supported by research from the Queensland University of Technology. Clients of financial planners were surveyed twice, 15 months apart, to assess the impact of financial advice over time.

It found clients’ satisfaction with their financial situation grew 12 per cent on average during this period, while clients who had been using a financial planning service for longer than this, believed they were in a much better financial position as a result of this advice.

So, what are the key advantages of using a financial adviser as opposed to trying to go it alone?

Financial planners are highly qualified and experienced professionals who spend their professional lives working in and around financial markets, reviewing and evaluating the best options for investing their client’s funds.

They are not influenced by Kim Kardashian or other would-be influencers, who may or may not know what they are talking about and who certainly don’t know if a certain investment is the best option for a particular client.

Importantly, financial planners spend time determining exactly what clients are hoping to achieve in managing their finances and they work to develop a strategy that is tailored to each client’s specific needs.

Financial planners determine just what clients’ attitudes are to risk and how much risk each client might be comfortable in assuming while determining which investments are most appropriate given their level of risk tolerance.

Financial advisers educate their clients to ensure they are making informed financial decisions, they do this via years of experience and a thorough understanding of how financial markets work in good times and in bad, they are also able to better protect their client’s longer term financial positions.

Advisers support their clients through challenging times when clients may not know exactly what they should be doing with their money or how they should be responding to one off events, such as falling markets or a spike in interest rates, this protects clients from making poor financial decisions based on irrational emotions or exacerbated media noise.

Most importantly, in using a financial planner, clients can rely on their advisers to put in the hard yards, investigating and reviewing various investment options, so they don’t have to. They give clients the financial peace of mind to get on and enjoy their lives.

So, while Kim Kardashian might be a great source of advice next time you want fashion or beauty tips, when it comes to investing your hard earnt savings, its best to rely on the professionals who know what they are doing and have your best interests at heart.

Christine Swanson is qualified professional adviser so you can ensure all your decisions are well-informed and that your personal needs and goals are considered.

Women are proving themselves very capable investors, just another reason for women to take control of their futures.

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We are qualified to discuss everything covered in this article and encourage you to contact us if you have further questions.

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