DIY Investing

 

 

In modern times, we are encouraged and emboldened to adopt a DIY (Do It Yourself) approach to just about anything through the increased availability of technology and information. Travel agents, insurance brokers and mortgage brokers are disappearing from the high street as online comparison sites help people build their own solutions. Online videos promise to teach the viewer everything from archery to cake making without ever leaving the house. It seems there is a calculator, generator or helpful tool of some sort for every decision in our lives. Some people even rely on internet-based diagnosis of illness before visiting their doctor. So why not use the vast range of resources available regarding financial services and investments to manage your financial plans? Why spend the time and money on employing a professional if all the data you need is right there at the click of a mouse?

 

Firstly, one should note that I could be biased here. Of course, one is naturally inclined to defend their profession. However, the mark of a good advisor is the ability to be objective. Furthermore, if I thought that my role was outdated and had no future, I would surely change career!

 

I think bias is a great place to start. How can we judge impartiality? When information and advice is provided by an anonymous source or a distant, detached online machine, how can we tell if it is truly impartial? It is possible that a particular website, owned or supported by a particular service provider, is programmed to lean its advice towards those particular products. Complex calculations can always be displayed to support a flawed result.

 

Beyond this, we need to be aware that we are not impartial when it comes to our own money matters. I believe that most people suffer from a form of financial dysmorphia. Some people at the gym will always see their reflection in the mirror as too thin, too fat, too skinny or defective in some other way that is imperceptible to everyone around them. A qualified personal trainer or dietician can provide the objective appraisal based on experience and fact in order to tell their clients when things are wrong, how to fix them and when they are right. Your financial advisor can do the same. Many people will look at their financial affairs and incorrectly appraise their own situation. Some think they are worse off than they actually are and can be prone to panic. Some erroneously believe that they have everything sorted out and are lining themselves up for future difficulty.

 

Apart from the ability to take an appropriate and impartial overview of the needs of an individual, perhaps the most important reason that everyone should have a professional advisor is just plain old experience and knowhow. This person deals with situations like yours full-time. If you want to be a financial manager all day, every day then go for it. Take your exams, do your research and spend the time and effort to become an expert but don’t try to do it in your spare time. Your personal wealth should not be a hobby any more than your personal health. It may be fun and educational to toy with the financial markets a little bit but think of the potential repercussions if you make a mistake with your family’s savings.

 

To round up, I should state that I believe a good financial advisor should also be able to teach and coach their clients. A long-term relationship between client and consultant should be a learning exercise and should be transparent. Effectively, after the years have passed, there is no reason why you shouldn’t be able to understand the reason and mechanism behind every piece of advice you have been given and the rationale of every solution to every problem. Your advisor probably hopes that once you reach retirement and spend less time at work you have learned enough to manage your own assets in your greatly increased free time. If they have taught you well, DIY investing and self-appraisal could be second nature, but this would be the result of a great deal of explanation and experience.

 

Online tools are great for research, background learning and jargon busting but can give a dangerous false sense of expertise. In short, DIY investing is possible, but so is DIY open-heart surgery. If the potential risk of failure is lasting damage to your future well-being, shouldn’t you be leaving it to the professionals?

 

 

 

About Edward Mainwaring-Burton

Edward Mainwaring-Burton is a Senior Financial Planner at DeVere Acuma. With many years’ experience as a top wealth manager in Geneva, the world's leading private financial center, he is an expert in individual forward-planning and private portfolio building. He meets clients by only and works with Acuma Dubai as a specialist in pensions and retirement structure to advise individuals on nationality-specific investment solutions and financial 

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