Updated: Nov 27, 2020
I was meeting with a potential client the other day, and the individual asked an insightful question. It’s one that I’m guessing others surely wonder, too.
The question was simple: Does everyone need a financial advisor? I think my response surprised the questioner. So, I figured I would share my thoughts on the matter more publicly.
I’ll cut right to the chase and offer my response. The answer, in my opinion, is as simple as the question. It takes just one word.
It’s a fact. Not everyone needs a financial advisor. As much as I – or anyone else in this profession – would like to pretend, there are actually people who can handle their finances without expert help. I will take it a step further and say I think most people could manage to make do without a financial advisor.
But there is a big if. If…they have the time and desire.
I know of plenty of people who enjoy learning about money and investing. They read books. They subscribe to financial magazines. They peruse blogs and articles online about money. For many, it’s almost a hobby. And I think it’s great.
Why should money and investing be any different than other tasks in our lives? Many of us are taught to cook, so we don’t have to rely on restaurants for all our meals. Some learn construction, plumbing, or electrical, so they can perform upkeep on their homes rather than calling a professional.
The same is true with financial matters. It can be learned.
But, while it can be learned, not everyone has the time or the desire to educate themselves about money and investing.
Here’s a similarity from my own life. I am a terrible mechanic. Regrettably, I never took an auto mechanics class in high school. It never interested me. I would like to think I could learn how an engine works. But, honestly, I’d rather not. I will gladly pay someone to fix our vehicles when something goes wrong.
I understand I could save money by learning more about auto mechanics. But I also know I can’t know everything. And learning takes time. Frankly, that is one area of my life that I choose to outsource to professionals.
For many, a financial advisor serves a similar role. It’s not that our clients can’t learn financial topics. They most certainly could. But they choose not to.
Instead, they choose to spend more time with their children or grandchildren. Or more time on the golf course. Or more time doing whatever it is that they truly enjoy doing.
They recognize they can’t know everything and reading about financial topics doesn’t light their fire, so they hire an advisor to assist them.
I will take it a step further. I have met plenty of people who have the requisite knowledge to manage their finances. They know about budgeting and saving. They know about IRAs and annuities. They know about stocks and bonds. And they know about long-term care, life insurance, and estate planning.
But while they have the knowledge, they don’t have the confidence. They don’t trust themselves. They fear they may make a mistake that will set them back unnecessarily. As a result, they work with an advisor.
So, while it’s true some people don’t need a financial advisor, I am personally thankful many do. It allows me to do what I enjoy doing.
Hopefully, it gives our clients more time to do the same.