Sometimes trying to get out of debt isn’t fun. It would be easier to have other people do it for you. I’d love to have a professional looking over my finances with me, helping me make plans, and….it would be great if this person went so far as to live out the frugal life for me. So I could be doing whatever I want and still getting out of debt!
But of course, getting out of debt requires us to change how we live. *sigh* Same as dieting. People can plan with you but they can’t actually make it come true. So I often wonder, is seeking professional advice worth it, when we have to do the actual living ourselves? Might it not make us stronger to do it on our own with the resources we can get our hands on?
I started thinking about this after reading Walter Updegrave’s (senior editor at Money Magazine) column this week on whether or not to ditch your financial adviser. The premise was that you’d started investing in index funds. Do you need the help anymore, or is your adviser just financial deadweight?
Well, I don’t have one. I’m very involved in our finances and read books by numerous financial planners and gurus (free advice, if you get them from the library). Plus I subscribe to a lot of blogs for more ideas and suggestions.
Yet I can see a few times when consulting one might be the right thing to do. Updegrave points out that there are a lot of questions facing us, even those of us who’ve decided to go the indexing route.
There are plenty of other questions you’ve got to deal with, starting with which index funds should you invest in? There are hundreds, after all, if you include exchange traded funds, or ETFs. Then there are questions like, how should you divide your money among whatever index funds you want to buy, and how do you maintain those proportions over time when different index funds are generating different rates of return?
And we haven’t even gotten to broader issues, such as how much of your earnings should you be putting in these funds anyway, so that you’ll have enough a large enough nest egg to retire comfortably? And when you’re ready to retire, what’s the best way to turn those balances into a reliable income that will support you the rest of your life?
Heavy stuff. For people who want to put their finances in order but don’t want to spend as much time as we PF bloggers do, maybe hiring an adviser makes sense. And for those of us who get involved, a one-time consultation might not be a bad idea. I like Updegrave’s suggestion that one not go the traditional route of paying a percentage of the portfolio. Unless one’s finances are very complicated, I think this is the route to go.
Today, there are a growing number of ways to get financial help, ranging from working with a financial planner or other adviser who charges an annual fee to hiring an adviser on an hourly or project basis to working with investment firms that provide advice over the phone or through online tools for a fee or maybe even for free. (To read an earlier column of mine that goes into these options, click here.)
I could see myself having a one-time meeting with a financial adviser whom I’d paid a fee to look through my life and make suggestions. Well, I could see doing it if I needed good advice. Otherwise, I’ll just invest the money. Support groups and the like are probably better for changing behaviors. Because in the end the adviser can’t do the living for me, just give suggestions.
And if you ever go with one, take Free Money Finance’s advices us and make sure your financial planner is not a loser!