Can I Analyze My Own Investments or Should I Pay an Adviser?
The old adage labeling the person "a fool" for heading into a legal battle without professional assistance occasionally also applies to the world of investments. Self-education provides the bedrock for an investor to analyze management decisions, but outside advisers also provide valuable investment strategy. Even when you have professional training and experience with financial investments, discussing investment possibilities with a qualified adviser offers an outside view to help in sound financial planning.
Investment Complexity and Activity
The complexity of your investments and the frequency of your trades help determine the amount of assistance you need, if any, to manage your wealth. Active investment portfolios requiring frequent transfers demand close management and attention. Analyzing a complex investment package also involves time to compare financial products and research potential growth in comparative areas. Investors with high-trading volumes or particularly complex portfolios incorporating multiple types of investments spend significant time managing the funds. Advisers help these two types of investors research the complexities and the facets of potential investments.
Investment strategies involve an analysis of traditional theories, including maintaining liquid reserves for an emergency and going with the tried-and-true investments of dividend-paying stocks. More aggressive investment strategies involve looking at new trends with the potential to bring significant profit or growth. New trends include emerging markets and taking advantage of temporary changes in federal and state tax policies. Professional services research investment information. Consulting advisers with specialized knowledge fills in any investment background gaps in your knowledge. Consulting a tax attorney with cutting-edge knowledge of new tax legislation, for instance, complements your own research on formulating investment strategies.
Analyzing investment opportunities takes time, especially when planning a portfolio of diverse interests. If you work in a field outside your investment interests, the money you pay to an adviser to help jump start your research saves you time -- and that translates to more time working in your field of expertise. For investors with lots of spare time, completing research and investigation involves locating resources and careful study of successful investment practices and techniques. Investors with sophisticated research skills and the time to use the skills, however, might not need outside advising.
Life changes sometimes trigger the need to consult a professional investment adviser to deal with rapidly changing financial situations. Inheriting real estate, stocks or cash means evaluating your financial situation to determine investment keepers for your portfolio and places to invest, if it is a cash inheritance. Other common life changes benefiting from professional advice include marital and employment changes. Taking the step into retirement frequently benefits from taking time to seek out experienced investment counsel.
Specialty Knowledge and Expertise
Advanced degrees, training certification and decades of experience mean informed investment advice. Advisers can't guarantee profits, but the chances for high interest, dividends and growth improve for inexperienced investors with an informed adviser providing investment guidance. Experienced professional advisers also help seasoned investors explore new fields for financial portfolios. When selecting an adviser, look for important licenses and certifications, including registration with the Securities and Exchange Commission and membership in the Financial Industry Regulatory Authority or the National Association of Personal Financial Advisers.
- Wall Street Journal: Five Investment Strategies to Help You Sleep at Night
- Financial Industry Regulatory Authority: Selecting Investment Professionals
- CBS News Money Watch: Financial Adviser -- Do I Need a Professional Financial Adviser?
- U.S. Securities and Exchange Commission: Investment Advisers -- What You Need to Know Before Choosing One
- National Association of Personal Financial Advisers: What Is Financial Planning?
- University of Illinois Extension: Consumer Guide to Choosing a Financial Professional
Lee Grayson has worked as a freelance writer since 2000. Her articles have appeared in publications for Oxford and Harvard University presses and research publishers, including Facts On File and ABC-CLIO. Grayson holds certificates from the University of California campuses at Irvine and San Diego.