With the wealth of information readily available online, it’s easy to feel that we’re all experts about everything. From scouring the finance blogs and Twitter for the latest “surefire” ways to beat the market, to diagnosing our aches on WebMD, to grilling along with Bobby Flay on YouTube, it can seem like we have almost instant access to the same information as the pros.
So when it comes to personal finances, why is it necessary to have a financial advisor when financial news is so readily available, Twitter is flooded with “hot tips,” robo advisors are ready to automate the whole process for you, and comparison shopping is so easy? Why can’t you just use this treasure trove of information to make your own financial decisions? Or subscribe to an algorithm-based service that will make the best lightning-quick decisions for you?
A couple of reasons…
If you’re good and you dedicate a lot of time online, you can definitely pick up some great information and strategies that the experts are sharing (follow me on Twitter by clicking here!) The tricky part is making sure that the information and the strategies are actually appropriate for you and appropriate right now. We all know that, if we’re not careful, the instantaneous nature of the internet, social media, and impersonal algorithms can lead to impulsive decisions that may not support our own long-term goals and personal risk profile. Quick reactions to new stock market “darlings” or to sudden market volatility can lead to choices that are not the best for your long – or even near – term financial health and growth. In fact, there is a whole science called Behavioral Finance that addresses how personal biases can lead investors to make decisions that actually work against the goals they set for themselves.
A good financial professional is able to sift through the vast amount of information available to you and determine what is significant to your strategy and what may just be a distraction. A financial advisor who understands Behavioral Finance can help you see where your assumptions, habits, and biases about money and investing may be leading you to get in your own way.
The new algorithm-based platforms are increasingly interesting and have a lot of merit, but the level of personalization is not yet very deep. That means that portfolios are based on broad criteria that may have nothing to do with your current situation, lifestyle, and goals. Again, this is where a trained professional will be able to view your unique individual needs and create a tailored strategy that is geared to you and not just everyone who matches your age and salary level. As more and more fiduciary financial advisors are starting to use smart algorithms as part of their offerings where appropriate, the key is “where appropriate” and “in the clients’ best interest,” the very definition of a fiduciary.
Think about it: would you rather grill along with Bobby Flay on your iPad or would you rather have regular meetings with Bobby, where he looks at the size and model of your Weber, the size of your shrimp, and the recipes you’re trying to learn, and works with you to make sure you become the master of your own grill? (and shrimp!)
The same goes for your financial future.
While do-it-yourself is getting easier and easier, that doesn’t necessarily mean it’s getting better and better. Look for a fiduciary financial advisor who also has access to the latest information online and is familiar with the latest algorithmic innovations, but who uses that information to get to know clients individually, and tailors a long-term growth strategy for them that will put them on the road to achieving the goals they have set for themselves.
11 Most Read IRIS Articles of the Week!
How to Keep your Advisor Website Fresh: Weekly, Monthly, Quarterly
The Amazon Rainforest Fires Show Need for Authentic CSR
A Change Plan Is Only as Strong as the Commitment to Nurturing Change
8 Questions to Answer to Go Down the Path of Customer-Centricity
The Reality of Financially and Emotionally Supporting Aging Parents
How to Conquer the 5 Big Lies That Block Your Progress
Shopify & 6 River: Game-Changing M&A in Warehouse Automation
Discussing Health Care and Medicare Concerns in Retirement
The Federal Reserve’s Third Mandate
Strategies2 days ago
Where The ETF Bulls and Bears Are
Behavioral Intelligence2 days ago
Far Beyond Risk-Tolerance Questionnaires
High-Conviction Investing2 days ago
Does Sustainable Investing Constrain a Portfolio?
Leadership3 days ago
The 4 Habits Of The Most Successful People
Marketing to Women3 days ago
Gleaning Insights on What Matters Most to Your Clients
Perspective3 days ago
4 Ways for Financial Advisors to Deal with Grieving Clients
Client Experience3 days ago
The Link Between Your Growth Mindset and Client Experience
Financial Podcasts4 days ago
The Importance of People Over Technology at an RIA