It’s no secret that we have more free information than we ever have before. There are hundreds of websites, articles, and blogs on how to invest, and what to invest in – as well as thousands of comments to get a variety of people’s inputs and perspectives. There are also tons of websites and threads with tips and rules of thumb on how much you need in retirement, whether to use an RRSP or a TFSA, or what type of insurance you should buy.
In addition to all this free information, technology has made it much easier to buy and sell investments. Wealthsimple, for example, provides a simple, easy platform to get started with investing – with options to build your own portfolio or have it managed by a robo-advisor at a low cost.
With all this increase in technology, and all the available information, it has brought upon a choice for investors – do I read all this available information, open an account, and do this on my own? Or do I value the advice and the experience of working with an advisor?
For those of you that are into fitness, you may compare this to working with a personal trainer, versus following workout videos on YouTube. Healthy individuals with simple, general goals, such as breaking up a sweat three times a week for good heart health, may find most of their needs are met from following YouTube videos. However, individuals with mobility issues such as back problems or previous injuries could really use a custom program and someone keeping an eye on them through the movement. In addition, individuals with specific goals like doing a bikini competition in 6 months, could use a custom program to tailor their body composition for that specific competition, and also to stay accountable to follow their plan in the tight six-month period.
But could a healthy individual with “normal” fitness goals work with a personal trainer? Absolutely! Some value the camaraderie, the accountability, and the posture cues without necessarily having a big competition to train for. Working with a trainer may also prevent injury that comes from lifting heavy weights incorrectly, and that is priceless to many. I worked with a personal trainer for a full year in 2020 and had done my workouts every single week in a consistent manner – the accountability to our scheduled sessions (both in-person and virtual) has made a huge difference.
Let’s take this back to finances
I have many insurance or tax filing clients that do their own investing because they are comfortable with it and do not yet need the advice. These are often younger clients with clear, simple goals of paying off student loans or saving towards their first house, and they are often only working on one or two goals at one time. I typically see them making the “switch” to working with an advisor when it gets a little more complicated – for example:
Many overlapping goals with less clarity on how much should be allocated to them, and in what type of account (retirement, going back to school, saving for a 2nd property, funding the kids RESPs)
When something changes in their life that triggers some tax planning – for example receiving a big bonus from work, or a change in careers or income that requires a review of their emergency savings, or even receiving an inheritance.
When they start a family or have a dependent spouse or family member, and wish to look at risk planning (insurance, emergency savings) more closely to balance with growing their investments.
When they get too busy to closely monitor their investment portfolio, and find they are not consistent with making contributions or reviewing their RRSP top-up options each year due to the many other life priorities they are juggling.
When they almost sold their investments during the last market downturn because there wasn’t someone to coach them into these investor reactions – and realized the potential losses they could’ve triggered from that move.
With all that aside, sometimes it is just great to have someone to talk to about your finances – someone to call up when you have a question about your benefits, or your pension plan at work, or on whether you should change your investment mix or contributions when something in your life changes. Many of us value having that person along the ride with us, that knows our situation, and can remove a lot of that overload that comes with having too much information and having to make so many decisions each day in our career and for our family.