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How to Find an Investment Advisor When You’re Not Rich


By Jeff Brown


For many people, financial management is a daunting task.

 

These days it’s easy to go it alone with personal finances and investing. Play with a few online calculators and some money management software, pick a few broad market index funds and, well, that’s it.

 

Going it alone is suitable for people with a do-it-yourself bent, have enough time and can live with setbacks, says Tom Warschauer, financial services professor at San Diego State University.

 

“If the answer to those questions is yes, go for it,” he says. “Discount brokerages with some artificial intelligence-type robo-advisors make it much easier.” Those are calculators that use your inputs – assets, income, age, financial goals and tolerance for risk, etc. – to recommend a mix of investments such as mutual funds of various types.

 

For many people, though, financial management is daunting.

 

“If you’re not interested in considering tax-incentivized products, reweighting your portfolio, diversifying away from unintended concentrations in your portfolio or adjusting your investments over time as life changes and goals shift, then going it alone is a perfectly acceptable path,” says Min Zhang, chief executive officer of Totum Wealth Management in Los Angeles. “However, most people still find comfort in engaging with a human and want to rest assured that an expert is managing their wealth, rather than letting the proverbial buck stop with oneself.”

 

Think about why you might need a pro. The more complicated your finances, and the less you know about saving, investing, budgeting, taxes and insurance, the better the odds professional advice will be worth the cost.

 

You can limit the cost by hiring one or more experts for just those things you really can’t do yourself. If you have a straightforward retirement savings plan at work but are overwhelmed by your tax return, hire a tax preparer, not a soup-to-nuts financial conglomerate.


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This article originally published May 18, 2016 on U.S. News and World Report

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