Should You Hire an Investment Advisor?

May 13th, 2009 by Nut

Managing your own budget is pretty straightforward once you get the basics down: make more than you spend and go from there.

But managing your own investments is a little trickier, especially once you’ve amassed a big chunk of money. At what point to you throw your arms up and say, “OK, this is too much money, I want someone else to do this for me”?

Apparently, J.D. from Get Rich Slowly has reached that point. His post on developing an investment policy includes one line that got me thinking:

Because I have so much to invest, I’ve begun to speak with financial advisors.

Note: It’s not certain that I will work with a financial advisor. I may decide to do this on my own. But I want to explore my options, and I want to experience the process so that I know what it’s like.

So he may not follow through on it, but he’s at least considering it. Since J.D. is one of the most respected and recognized personal-finance bloggers out there, I was surprised that he was considering making this move. If he can’t do it on his own, what hope do the rest of us have?

So why does someone who know all this stuff so well need to pay someone else to do it for him?

I’ll tell you why: managing a lot of money is stressful. If I had a million bucks, would I continue to invest in the same funds I invest in now? Probably not, I’d take half of it and put it in a savings account, then take the rest and probably hand if off to an “expert.” It’s scary to think of having all that money under your command…

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7 Responses to “Should You Hire an Investment Advisor?”

on 13 May 2009 at 12:45 pm1The Other Side

We have a couple of different advisors/brokers. (Mine and my wife’s before we were married.) I like both of them, but sometimes I wish I just had everything at Vanguard. But it is nice to have a real person you can talk to sometimes.

I think that if you stick with index funds and have a reasonable allocation you’ll be alright doing it yourself.
on 13 May 2009 at 8:37 pm2Imani

Wow, You all are rich…all I have is my ING and don’t need any help with that.
on 13 May 2009 at 8:38 pm3Imani

PS Guess I’m traveling with the wrong circle here…Sorry.
on 13 May 2009 at 9:23 pm4Nut

Imani, once your retirement funds start to grow, you might be having the same decision to make!
on 14 May 2009 at 12:37 pm5josh

Nut, how much should a person have before he/she seeks an investment advisor?
on 14 May 2009 at 1:15 pm6Nut

I think that’s an easy one, Rob. However much it takes for you to go “OMG, this is way too stressful for me.” You’d have to find out if you truly trust yourself and what you know enough to handle that much money.
on 19 May 2009 at 3:20 pm7Find an investment advisor

I run a company, ClaroConnect.com, that matches people to financial planners and investment advisors. Many of these thoughts are correct- if you can put yourself on a monthly budget and pick a diversified portfolio for your 401k or IRA, then there may not be much need to work with a professional. Of course, many people DO need a professional- if you are getting close to retirement and don’t know if you have enough money, if you are wealthy and want someone watching it full time, if you need a complex product like life insurance, if you want to do socially responsible investing, of course if you are setting up a trust for a disabled child— there are thousands of situations where you absolutely should have a professional helping you.