You wouldn’t operate on yourself, would you?

Many people have asked me, “Why would I hire a financial planner? Wouldn’t it be better if I just invested in ‘no-load’ mutual funds, bought my own stock and signed up for term insurance on my own?”

Good question.

I have many “do-it-yourselfers” as friends, family and even clients. Specifically, with my clients who are of the mindset that they can handle things themselves, I have been hired, at the minimum, to be a guide, offer a blueprint or do an annual checkup.

For those of you who feel that handling your own investments (the E-Trade crowd) without professional assistance are, at the least, operating on yourselves amidst major surgery with enormous implications.

Nowadays, mutual funds have been so investor-friendly, moreover, advisor unfriendly, that the argument to do-it-yourself becomes even stronger.

Nowadays, many people ask, “what’s a good stock pick?…if I invest in this stock my buddy told me about, I should see 2000%!…I just put all my money in my company stock because I get a 15% discount.” Remember Enron? Not that your company operates in similar, slimy fashion, but you know what they say about putting all your eggs in on basket…

Nowadays, I hear the quote “I just buy term insurance and invest the rest.” According to the insurance commissioner in Oregon, 97% of the time term insurance doesn’t pay out. Meaning, only 3% of participants actually die within the term they purchased, and because the premium for the “cheap” insurance skyrockets once the term expires, most don’t renew. Is term insurance really what you “need?”

To answer the aforementioned questions, I propose the following:

Even with a medical kit, scalpels, gauze, anesthetic, and a 90% chance that your arm will stay on, in fact function, still, you wouldn’t operate on yourself, would you?

“Awww, c’mon, Marc. Financial planning and operating on your arm are totally different things.”

Are they?

I wouldn’t want anyone to work for the rest of their life hoping that what investment decisions they make today will benefit their financial future indefinitely. I believe in my profession and feel most investors need one of me.

Unless you are educated, disciplined, unbiased, unemotional and downright devoted to the performance of your investment portfolio, (i.e, when to buy & sell, how much of what and how to diversify in an asset allocation strategy that is appropriate for your age, time frame, risk tolerance and estate planning goals), it could be a grave mistake to “operate” on yourself, financially speaking.

Many of us are emotional investors. I know, before I began my career, I didn’t want to take too much risk. As you may know from reading my last column, inflation risk is imminent when allowing a bank to takeover, placing our money in a CD, or being too conservative. When I began my career, I was only 23. If I would have invested “emotionally” or performed my own financial operation without my training and knowledge, I would have but a fraction of my investment totals that I have today. Because I realize many are in the position I was then, I call out to you, now.

Don’t handle things on your own unless you are totally prepared to focus your investment efforts as if you would a part-time job. It is that complicated. You go to work for money. You should know that it is work managing money, as well.

Like I stated earlier, I, as an advisor, function as a guide for some of my clients who like to do-it-themselves. For others, I provide a blueprint, such as an architect who maps out a house and has the dwellers build it. And further still, I can simply offer an annual “check-up” just to make sure that the decisions certain clients make are the correct ones for them.

Even if you were a surgeon, operating on yourself is not wise. Although I do admit, I manage my own investments, the point of your long-term risk versus benefit (i.e. lack of worry, increased security and peace of mind) for a nominal fee (which should be a percentage of your assets on a yearly basis to provide incentive for growth) should be noted.

You will want to select an advisor who fits your expectations on education, age (don’t necessarily pick someone older because you think they are more grounded, you may want them for your entire retirement), match in personality and most of all, someone who listens. Your goals are the most important when on the operating table. You should have a qualified advisor (or team of advisors) who has/have a clear understanding of what you desire when you retire.