Good Financial Advice: DIY or Call in the Pros?

Posted on 15. Nov, 2010 by in Wealth Essentials, Wealth Productivity

InvestingDespite what you might think, good financial advice can be hard to find.  Sure there are stacks of accountants and financial planners available, everyone is an expert when you ask them, but how many of these people are wealthy?  I’m not asking if they are paid well, but whether or not they practice what they preach and follow sound money keeping strategies themselves.

Personally, I have found that good financial advice is really hard to find!  You see it’s not just about finding someone to give you the good oil on investments and where to put your money, it’s about finding someone that understands your position and your perspective.  I’ve spoken with stacks of money experts who all have similar advice about saving or investing and most of the time it just doesn’t align with my plan and what I feel comfortable with.  The real problem tends to stem from the fact that many of these people tend to recommend products that they benefit from rather than assets that benefit you, so they really aren’t acting in your best interest.  To be fair, it’s only natural that the people we ask to help us make money are first and foremost out to make money for themselves, it’s their business.

Make Wealth Creation Your Business

If you get paid by someone else to do a job, I’m guessing you are pretty good at it.  You know all there is to know and you work hard to do a good job, because that is your source of income.  If you work for yourself this is probably even more true.  Perhaps you went to university, or have done some extra training as well to develop skills in your particular area of expertise?  Nice one!  that is dedication.  How about your hobbies?  How much time do you allocate to those and how much money have you spent on things like equipment, memberships or training to get better?

So what if I asked you how much time and money have you put towards wealth creation?  how many courses have you undertaken and how good at it are you?  I’m hoping that you are listing off some examples in your head right now!  I don’t want to sound like a salesman here, but you should be investing in yourself and growing your knowledge if you want to grow your wealth.  Even if you do get other people to do all the work for you (this is the end goal anyway), you always need to understand what is happening with your money.  Knowledge is power and financial literacy is king, it will help make your money work for you and ensure you keep more of it.

The good news is that if you are just starting out and trying to get your head around the whole wealth creation thing, you don’t need to spend a fortune.  Start by bookmarking and reading some good sites online.  Remember that wealth creation is more than just about making money, so make sure you balance your reading with content that helps you develop the lifestyle you want.  I have previously mentioned some of my favourite online resources in my post on Setting Goals for Wealth Creation, but most of these focus on lifestyle (which I think is very important).  If you haven’t already checked out Get Rich Slowly and The Simple Dollar, then I suggest you get over there for all things related to personal finance.  Another top wealth creation leader is Ramit Sethi at I Will Teach You To Be Rich.  Ramit has a really great perspective on wealth creation and runs a fantastic course that challenges people to harness their inner entrepreneur.

To supplement your online reading, you could also try reading some of the books that you see regularly recommended on the sites you visit (all three of the guys listed above have published books, so you may like to start there).  There is a good chance that you will be able to loan some from your local library, or you may like to buy them online.  I like to keep the books I read, so I buy them.  If you are the same, then I recommend checking out top sellers on Amazon and creating a wish list to keep track of what you want to read.  You can also try the Book Depository for really great prices and free delivery anywhere around the world.

Once you start investing you need to be doing specific research about the area you intend investing in.  If you have already started, then you should be trying to learn as much as you can or at least as much as you deem necessary.  Some people just don’t get into the fine detail, that’s cool, just make sure you understand where your money goes and what is at risk before you invest.

Financial Experts

These are people with knowledge about money, they could be a banker a broker or financial planner.  They are not necessarily wealthy people, but they have made it their business to know about the process of investing or accessing money.  Most of these people talk about wealth management, which doesn’t sound like nearly as much fun as wealth creation.  I’ll admit I’m a little bias, but I like the creative aspect, the term ‘wealth management’ doesn’t send positive signals to me, it tends to imply:

  1. They need to manage your wealth, which means charging you for their time (often)
  2. Your wealth is a problem and it needs looking after (often) or you will lose it

There is nothing wrong with paying for the right financial advice, in fact I recommend it, but just as you do your homework on your investment options, you should also do your homework on your financial experts.

To help you find the right financial expert, ask the people you know that make wealth creation their business who they use.  If you are a little hard up on wealth creation champions, I would recommend you start networking with other people that share your interests.  If all else fails you can turn to the all knowing Internet.  Most financial experts (particularly bigger companies) have an online presence, so go and check them out.  The more helpful ones will offer to talk with you one-on-one, which generally doesn’t cost anything – after all, they want your business.  Go ahead and take them up on the offer, but don’t feel compelled to commit to anything until you are comfortable.  This is an interview, you are the employer, they are the hopeful employee and you need to ask some targeted questions to understand what you will get for their services.

As a bare minimum, I would suggest asking the following:

  • Ask who will manage your account and make sure you speak directly with them
  • Ask what area they specialise in – real estate, shares, mutual funds, or specific loan types etc. as this will help you decide if they fit your preferred investment strategy
  • Ask them if they invest in these areas themselves – people are a lot more switched on when they have a stake in the game!
  • Ask them about their investment philosophy – I’m not going to tell you what is right or wrong, but their philosophy should ideally match yours.  Remember the goal is to accumulate assets
  • Ask them how they get paid – this could be a fixed fee, loan trailing fees, or a percentage of the amount invested
  • Ask them if they get any other incentives for any of the products they recommend

Think up some more questions that are important to you and ask those too.  With luck you will find someone that understands your needs and works with you to grow your wealth.  Once you find what you are looking for, make sure you review your position regularly and continue to grow your knowledge.  At the end of the day, even with all the help in the world, it is up to you to create your own wealth.

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5 Responses to “Good Financial Advice: DIY or Call in the Pros?”

  1. Jessica07

    17. Nov, 2010

    You’re quite right that “[finance professionals] tend to recommend products that they benefit from rather than assets that benefit you.” With the wealth of information available on the Internet, and many great finance books available at the library or used at a bookstore, nearly everyone has the tools they need to get their minds wrapped around wealth creation.

  2. Shaun

    17. Nov, 2010

    Hey Jessica,

    Thanks for commenting 🙂 There are so many resources available these days that there is really no excuse for people not to be able to educate themselves. It’s amazing how much is on offer and freely given on the web alone!

  3. Jessica07

    19. Nov, 2010

    @Shaun. Yes, I know what you mean. Every time I read one of your posts, I’m like, “Sheesh. I should be paying for this information.” He-he.

    • Shaun

      19. Nov, 2010

      Thanks Jessica, that is very nice of you to say. I’m a big fan of what you and the others are doing over at Momvesting too!

      Keep up the great work

      • Jessica07

        19. Nov, 2010

        Thanks, but I’m supposed to be incognito. Way to blow my cover. LOL. Just kidding.