Should You Manage Your Finances Yourself or Hire a Professional?

Should you do anything yourself instead of hiring a professional, really? A question weighed by minds of the likes of Aristotle, Confucius and Nietzsche. Indeed, it’s easy to imagine Nietzsche exclaiming – ‘hold mein Bier, I’ll do it myself’. Or something along the lines. However, while even half a century ago doing things yourself might’ve often been the only option, modern life comes with much more convenient solutions to about any problem you can imagine.

Such is the case of managing your finances. The world has evolved past whether you have a financial advisor in your village or not. Solutions to your needs are readily available just about anywhere and anytime – provided you have an internet connection. It’s just a matter of knowing whether you require help with your finances. So why and when should you hire a professional?

Pros of hiring a professional

A financial advisor is a profession that is regulated by national laws around the world. Any individual practising in the financial advisory field therefore is required to comply with various rules and regulations. This not only makes you feel safer, but also assures that you’ll actually get what you pay for.

Now, there are multiple reasons why you would want to hire professional help in managing your finances, including but not limited to:

• Your time is expensive. It might not feel like that in your twenties yet, but you just wait. Einstein’s Theory of Relativity states that time is relative. And since human lifespan is finite, every passing year will become more and more personally expensive. Imagine how much time you could save by entrusting your finances to a professional!
• There has been an unfortunate or fortunate event in your life that has brought upon you additional money. This might include receiving an inheritance, divorcing your spouse, winning the lottery and so on. These sorts of events usually tend to be stressful, and you would undoubtedly benefit from having a professional help you through the financial aspect.
• You are running a personal business. In this case, hiring or outsourcing to a financial advisor can help you twofold or more. You would both have more time for your actual business and less worry about there being some inconsistencies with your finances, taxes.
• You’re looking for advice on how to manage your finances to simply get you going, or need help in setting up a comprehensive financial plan for your future. This certainly warrants at least consulting a professional, which can at the very least give you a better understanding where you stand in terms of your finances.

Out of these, you’ll notice, time is most important. No matter what issue you’re facing, time will likely be the more significant factor to consider. By hiring a professional, you can save valuable hours, days or more on research and learning. A financial advisor will already be up-to-date in terms of legislation and tax policies regarding personal finances as well as on investing through different types of accounts and platforms such as investing through ISA. And if you do in fact want to learn more about how to manage your finances or specific financial instruments you’d like to employ – nothing like hiring a financial advisor to help expedite your venture.

Cons of hiring a professional

There really aren’t any cons in hiring a professional to help you with your financial goals. As long as you:

• Have basic comprehension about your finances and know when and why you should hire professional help. It would be inefficient and expensive to pay someone to tell you that you can’t afford skiing in the Alps this season. While a financial advisor can and will help you enhance your finances, you should have at least the minimal grasp on managing your budget by yourself.
• Make sure you’re actually hiring a professional that possesses the necessary certifications and validations to operate in the finance field. And, while it’s not always easy to determine beforehand, some advisors may not be up to the task of helping you due to simply being incompetent. To avoid this issue, don’t ‘jump in the boat’ before making sure the financial advisor both fully understands your needs and can provide a sound plan of action.
• Make sure you hire the appropriate professional. For example, a financial advisor can help you set up a retirement plan or a trust fund for your descendants, but you will need to hire an investment advisor or an investment broker if you want someone actively managing your investments for you.

Okay, as you can see, it’s not that straightforward after all. Just like in hiring a financial advisor, there are multiple reasons when and why you shouldn’t. However, these reasons usually concern your ability to determine whether you actually require this service, and – is the service you’re hiring a) up to your needs; b) valid – i.e. will you receive the service you’re paying for.

The ultimate goal in hiring financial help would be to save, or better yet – make time and money. In order to do this, you also need to use common sense on when not to hire a financial advisor.

And, mind the tongue-in-cheek header of this paragraph. The financial advisory field is still haunted by professional confidence men, like no other. Always be sure to hire establishments and professionals with valid certifications and a safe background.

In conclusion

Hiring a financial advisor is not particularly complicated, nor is knowing when to. Do so when you stand to gain in saved time and/or money, either in your everyday life or for your business. Do so when you need additional help in setting up long-term financial instruments, like a retirement plan or a trust fund.

Whether you’re looking for a one-off advice or a long-term service – make sure your financial advisor understands your needs, by communicating and explaining. Mutual understanding is how you gain the most from this professional relationship.

This is an informative blog entry and should not be taken as financial advice.