A Tragic Mistake: ‘I Don’t Need Help Handling my Money’
By Larry Light, Editor-in-Chief
May 1, 2013
We all like to think we’re smart and self-sufficient. A lot of folks believe they can manage their financial lives by themselves. These do-it-yourselfers are woefully wrong.
AdviceIQ is about giving the world the wisdom of smart, honest (none can have any regulatory infractions) advisors. Are we blindly pro-advisor? No, we are clear-eyed about being pro-good advisor. Everyone, even the financial cognoscenti, should have such a helper to sort out life’s perplexities.
Lamentably, the financial crisis and the Bernard Madoff scandal convinced many to steer clear of advisors. According to a Deloitte consulting firm study, 57% of those polled say they’re more comfortable handling their retirement planning on their own. Plus, 38% contend they need no professional advice to plan.
Really? A story from Paul Sullivan shows how wrong-headed they are. Sullivan is enormously well-versed in personal finance, which he writes about for the New York Times. But it turns out that even he could use some help with his portfolio. One day he went before Tiger 21, an investment club of very wealthy (with at least $10 million in net worth) types who assessed his financial situation. To Sullivan’s surprise and dismay, the group found major holes: He and his wife didn’t have enough insurance, they carried an unneeded vacation home and spent too much.
The blasé DIY attitude vexes Edmond Walters, founder and chief executive of eMoney Advisor, which provides support services to advisors. He watches discount broker TV ads that promise you can direct your investments by yourself, without paying an advisor. “It’s dangerous,” he says. “The ads say you can come home after work and spend a couple of hours trading a month. But the professionals have a lot more information than you.” Result: You get slammed.
As the Times’ Sullivan attests, it’s good to have a more knowledgeable someone guiding you, an expert who keeps up with all the arcane changes in the financial arena. Do you know how much disability coverage you need? Are you saving adequately for your kids’ education? How much money are you wasting for no good reason? Will your investments support you through your retirement?
Walters spent almost two decades as an advisor before he started his current company. “But,” he says, “even I have an advisor.”