When do you need a financial adviser and when is it simpler to just DIY?

To answer whether you should go DIY or employ an adviser, we need to first get clear on what a good financial adviser actually does for their clients.

Two years ago, I gave myself the task of rewriting my client service charter. It’s been through several drafts now and I'm not completely satisfied with the final output (there's a lot to squeeze in and it varies from client to client), but it exists, it is evolving, and this is one of the questions it seeks to answer.

Let's start with the fact that there is no cheat code to Financial Planning. Neither when you finish the qualifications nor when you've achieved 10, 15 or 20+ years’ experience do you get handed the document with the secret recipe. Despite the click bait, there is no free pdf you can download with the secrets to financial success.

Indeed, I get the impression that a lot of people misunderstand what financial advice really is. A lot of clients come to the first meeting expecting to meet with a stock picker. Investment advice and recommendations are a core part of financial advice. However, a good financial adviser is more than a one trick pony.

A good financial adviser wears several hats and should bring at least the following three to the table:

1. Problem Solving: tell them your problem and they'll work with you to clarify what specifically needs to be done and help you put it in place: they help you unload the burden and take positive action.
2. Technical knowledge: complex problems can require complicated solutions: They've got the know-how, they can help build strategic plans and often help you save tax in the process.
3. Performance Coaching: Setting goals, clarifying those objectives, putting plans in place, an accountability partner to help you get it done, guiding you through turbulent times and assisting with course corrections as required when either the goals change or the environment changes or both.

How about DIY?

Given the above misconception of financial advisers as stock pickers, I believe there is therefore also a misunderstanding and oversimplification as to what is involved when going DIY.

It doesn't mean that DIY isn't an available option, it means that going DIY might involve more than you'd initially imagined. But DIY can definitely work for some people.

So, let's answer the question directly: when does DIY work?

• If your needs are simple and you know what the answers to your problems are and
• if you have a clear idea of what you want to achieve and what you've got to do and
• you have the technical know-how to get it done and
• are able to put in place the appropriate tax planning solutions and
• you have the discipline to actually do it year in year out, and
• the interest and enthusiasm to stay on top of

- investment performance

- fund manager changes

- legislative and

- tax changes and

• you have the will power and calm centre to stay the course through turbulence and
• make adjustments when life shows up and there are the inevitable bumps in the road

If you're happy to take on that challenge singlehandedly then go for it. And if it doesn't work out, so long as it hasn't gone too badly wrong, you could seek advice in the future if things get more complex or the turbulence proves too challenging to steer through.

A helpful metaphor is to say that building a retirement portfolio, or building any structure for financial freedom, is like building a house. If you were building a house would you hire an architect and builders or would you do it all yourself?

These days it’s not at all impossible to gain the technical knowledge and go DIY in almost any endeavour. My good friend is a builder, and he is planning to build his own house. He has 15 years' experience in the trade and assures me it is all very straightforward - but I struggle to understand half of it, and I certainly don't have the skills and abilities he has learned over the years. And whilst this is something I'm becoming more interested in as I think about whether we could put an extension on our house, quite frankly I don't have the time, energy or desire to dedicate to learning a second profession. It's huge amounts more work than I would like to take on myself and I value the input of experienced professionals to get the job done to a high standard.

And my good friend looks at my profession in much the same way. He's dabbled with investments and knows a thing or two, but much prefers to have his investment and pension portfolio professionally managed and advised. It frees him up to do what he does best.

Thus, the real question when considering DIY vs advised, is not about just intelligence and experience, but capacity, interest, discipline, perspective, and support.

To recap, here are some of the reasons why people choose to work with financial advisers and the potential benefits they may experience over the years:

1. As a problem solver, a good financial adviser provides a third-party perspective on the challenges at hand, they have the required distance to be able to see the route through the fog. They provide solutions, they provide relief and eventually a sense of achievement as solutions are implemented, milestones are checked off and objectives accomplished.
2. The technician can take some seriously tangled knots off your hands; help you unwind them and potentially present options and solutions you'd maybe never have thought of. Particularly when it comes to tax planning, technical knowledge is worth its weight in gold and is the realm of an experienced professional deep in their specialist area. The specialist's ability to take overwhelmingly complex issues and simplify them into a set of logical steps can provide real clarity and help take the weight off your shoulders.
3. A great adviser doesn't tell you what to do, they ask lots of questions, really get to know you and what you're about and what you're looking to achieve, and they work with you to help you get there. Providing both accountability and also reassurance and ongoing assistance.

They are there for you to call when things change and they make proactive calls and provide regular reviews, not just looking back over what happened since the last review but also looking ahead and helping you make sure that the course you're on is still taking you to the place you want to be. Financial planning done properly is not a "one and done" event, it is an ongoing journey towards and through the elusive, shifting landscape of financial freedom.

My last word on the subject for today, and it's come up in pretty much every section above, but a core benefit of working with an adviser (in fact with any good professional consultant or coach) is the simple fact that they are another person, that they have a fresh perspective, that they can help you see different solutions from different angles and as another person, they can help act as an accountability partner.

I'm an intellectual type, was a bit of a nerd at school and I love research and knowledge and finding my own answers - but, just like everyone else I've ever met, I find it much easier to implement solutions for others than I do for myself. When it comes to my personal objectives, I'm not always great at singlehandedly doing what I know I need to do because often the action I need to take is to address my own concerns and obstacles, and, frankly, my concerns challenge me and so I can prevaricate on taking the next steps. Advisers need advisers too. Involving a trusted professional helps me get things done and helps me stay on target - because there's a difference between knowing what needs to be done and actually doing it, and the right professional can really help with that important (but often overlooked) piece of the puzzle too.

In summary, financial advice done properly is not merely technical expertise; it is perspective, structure, accountability, and ongoing partnership.

Daniel S. Hanbury Ba(Hons) DipPFS

Financial Adviser & Director

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