When to move from DIY investing to an adviser

 By Chelsea Traver at Evergreen Advice

In recent years there has been an explosion in DIY investing, supported by the birth of user-friendly, low cost, investment platforms. With this increase in DIY investors, there has also been an increase in free educational resources including sites like Money Hub and information offered by the platforms themselves to help new investors make informed investment choices. Some people might be happy to manage their own investments, but others might wonder when to look at getting advice. The short answer is that there is no right or wrong time to move from DIY investing to an adviser and it’s more a personal decision as to whether they would add value to your specific situation. Below we delve into five things to consider when thinking about moving from DIY investing to an adviser.

1. You don’t NEED to hire an adviser

The first point to mention is that if you like managing your own investments, and you feel comfortable doing so, you don’t need to get advice just because you have a certain amount of money. There are many investment platforms that provide the infrastructure needed to invest, as well as educational resources. These platforms include the likes of Kernel, Sharesies, and InvestNow, all of which give you the ability to invest in an easy and automated manner.

It's important that you have some level of knowledge about how investing and financial markets work or it can have serious consequences for your future, i.e. diversify, don’t panic when markets fall etc. Even if you are looking to hire an adviser it’s good to educate yourself so that you better understand their recommendations and why the market goes up and down. This will not only give you more confidence in your strategy but also help you to worry less when your investment inevitably drops in value. As a starting point, I love Mary Holm’s book “Rich Enough?”.

2. Triggers to hire an adviser

For some people seeking an adviser is triggered by an event, for others it might be a more gradual realisation that they might want help.

To start off, here are some potential life events where a financial adviser might add value:

• Inheritance
• Divorce
• Significant salary or job changes (for example going from salary to freelance)
• Sale of property
• Term deposit maturing
• New child

There isn’t always a big event though, and it might be more of a gradual decision to seek hiring a financial adviser. Perhaps you just want to make sure your money is working as hard as it can for you and your family. Or your funds have reached a certain size and you’re questioning if it’s time to get professional advice given the amount of money involved.

If you’re wondering how much you need to work with an adviser this can vary widely between advice firms. Generally, the minimum funds to invest is about $50k although this figure might depend on a number of other factors and some advisers offer one-off advice which wouldn’t have any minimums.

3. Benefits of working with an adviser

You don’t need to work with an adviser so the first thing to consider is if they would be of value to you. To help, here’s a rough idea of what advisers do and why they might benefit you. If you look at this list and see things you would value, then it might be time to explore hiring an adviser (more on that below).

Financial Planning

• Create a plan to help you make smart decisions with your money.
• Model your future portfolio balance to show you the implications of different decisions.

Investment Management

• Decide what level of risk is appropriate to take in your portfolio and select optimal investments.
• Continuously monitor your portfolio.

Financial Partner/Coaching

• Help you stay disciplined when it comes to spending, saving, and investing.
• Ensure your investments continue to match your changing life.
• Be your person to come to for any financial questions.

Note: Some advisers will purely look after your investment portfolios while others offer a broader service of financial planning which includes reviewing and providing advice on your whole financial situation.

4. It doesn’t have to be one or the other

It’s important to note that even if you do want to hire a financial adviser, it doesn’t mean you have to completely abandon DIY investing. If you like managing your own investments, you could consider having an adviser manage a portion of your funds and complement this with a DIY portfolio. Your adviser could give you some tips and help you decide on the appropriate amount for each bucket so you can achieve your financial goals. It’s good to have a strategy to make sure you aren’t doubling up or getting too concentrated in any one area.

Additionally, some advisers (like Evergreen Advice) offer DIY investment plans where they review your current assets and give you a suggested investment strategy that you can implement and manage yourself. These plans might include recommendations on which platform to use, an asset allocation and a list of preferred investments.

5. Before contacting an adviser

Not all investment advisers are the same so it’s important to think about what you are looking for at the start of your search. This will save you time in the long run as you will be able to easily identify if a prospective adviser matches what you want rather than realising part way through the advice process that they aren’t what you were looking for. You can ask about your “must-haves” in the initial discussion to screen out advisers that might not be right for you.

Some things to consider:

• Would you prefer an adviser near where you live or are you happy to have some (or even all) meetings virtually?
• Do you want an adviser that offers ethical investment options?
• Do you want a fee-only adviser or a commission-based adviser?
• What is their minimum investment amount?
• Will they provide advise just on a portfolio managed by them, or also a DIY investment portfolio?

Mary Holms also provides some tips on choosing an adviser.

Final points

While you don’t need to hire an adviser, if you think you may benefit from their services it could be worth reaching out to get a better understanding of what they do. Many advisers offer a free initial consultation to help you decide if they are the right fit. Just because you start down the process of hiring a financial adviser doesn’t mean you ultimately need to invest with them. It is best for you and your adviser that you truly value their service. Ask questions, be curious, and make sure you understand what you will be investing in.

If you ultimately decide to manage your investments yourself that’s perfectly fine and you shouldn’t feel pressured to get an adviser just because you’ve reached a certain asset value or age. An adviser can make a tremendous difference in a person’s life however YOU are the best person to decide if they will add value to your finances.

Disclaimer: This article is general in nature and does not constitute financial, tax or legal advice in any way. Should you require such advice, please contact Evergreen Advice or a suitably qualified professional.