Why Smart Investors Still Use Financial Professionals
Investment information has never been easier to access.
You can research ETFs online, compare super funds, buy shares from your phone and build a diversified portfolio without ever meeting a financial adviser.
So why do financially sophisticated people still pay for professional advice?
Often, it's not because they don't understand investing.
It's because knowing what to do and consistently making good financial decisions are different things.
Investing Is Only One Part of Wealth Management
A financially successful household may have:
superannuation
shares
property
a business
trusts or companies
substantial debt
insurance
estate-planning considerations.
The challenge isn't necessarily finding another investment.
It's coordinating everything.
Should additional capital go towards super, investments or debt?
Which structure should hold an investment?
How much risk should the household take?
When should the portfolio become more defensive?
How will investments eventually generate retirement income?
These are planning questions rather than simply investment-selection questions.
Professionals Can Provide an External Decision-Making Framework
Investing becomes most difficult when emotions are strongest.
When markets fall, fear can drive selling.
When markets surge, fear of missing out can encourage excessive risk-taking.
A professional adviser can provide an external framework for making decisions against the financial plan rather than against today's headlines.
That doesn't remove investment risk.
It can help reduce the risk of making significant decisions for the wrong reasons.
Complexity Increases With Wealth
Early wealth building can be relatively simple.
Earn.
Save.
Invest.
Repeat.
As wealth grows, decisions can become interconnected.
A change to your super strategy may have tax and cash-flow consequences.
Selling an investment may create a capital gain.
Buying property may change your debt and liquidity position.
Retirement can change how assets need to generate income.
The value of professional advice can therefore change as your financial complexity increases.
Good Advice Should Be More Than Investment Picking
If you're paying for professional advice, understand what you're actually receiving.
Good advice may involve coordinating:
investment strategy
retirement planning
superannuation
cash flow
debt
personal insurance
tax considerations with your accountant
estate planning with your lawyer.
The objective shouldn't be to create dependency on an adviser.
It should be to create better financial decisions and a clearer strategy.
Why Successful Investors Still Seek Advice
Smart investors don't necessarily use professionals because they can't manage money themselves.
They may use them for the same reason successful businesses employ accountants, lawyers and other specialists.
Their finances have reached a point where the consequences of major decisions can justify specialist input.
Financial Advice for Investors in Perth
For investors and business owners in Subiaco and across Perth, the question isn't simply whether you can manage your own investments.
Many people can.
The better question is:
"Where could professional advice improve the quality of my decisions or reduce the risk of an expensive mistake?"
As wealth grows, that question can become increasingly valuable.
This article contains general information only and does not take into account your objectives, financial situation or needs.