Financial Planning For The DIYer: Can You Do This Yourself?
Anyone with more than eleven minutes of experience in financial services—or, likely, any service position—has been asked this question: why do I need you?
The short answer is you don’t. But that doesn’t mean that using a financial advisor is not a good idea.
What can I do myself?
The reality is you can create every aspect of a financial plan yourself. If you’re a do-it-yourselfer and you’d like to do this, there’s nothing in financial planning that can’t be done on your own.
If you have the time, interest, and knowledge (or a talent for precision Googling), you can build a financial plan that will look similar to one drafted by a professional. There are tools and platforms available that make this possible, or even simple, to do on your own.
Have you ever built a deck?
Let’s look at this outside of the financial lens. Say you wanted to build a deck behind your house. There are different courses of action you could follow to get it done.
If you’re handy with a toolbox and have time to spare, you could find tutorials or YouTube videos and build the deck with your own two hands.
Maybe you’re not great with a hammer but you want to be in control of the process. You can determine exactly which types of services you’ll need to build the deck—a lumber supplier, a builder, a painter, a surveyor—and hire each professional and oversee the job is done to your liking.
Or, if you’re busy focusing on other things, you can hire a general contractor and trust that he or she will make sure each step of the project is completed and that the final product is up to your specifications.
For the person with the time and commitment to build out their financial plan from start to finish, there are programs and online tools that will allow you to do so.
Robo-advisors are also good tools to help you allocate basic investments and start creating your portfolio.
You can file your own taxes, track your own expenses, manage your own risk and work towards your financial goals in your own way.
Being Your Own Contractor
For those who don’t want to be completely alone but still want to handle a lot of the job, you can oversee your own planning and bring in professionals when needed.
Maybe you bring in a CPA at tax time and find your own estate attorney to draft your power of attorney documents. You can monitor your own portfolio and investments, be in control of where each dollar in your account goes and only seek help when absolutely necessary.
Bringing in the General Contractor
People are busy with families and jobs and hobbies. They don’t always have time or interest to dedicate to quarterbacking their financial plan. That’s when a financial advisor can take the role of the general contractor.
While you still have the final say on what you want to do with your assets, you don’t have to worry about the day-to-day maintenance of your accounts or the tasks required to keep you moving towards your goals.
A Certified Financial Planner™ practitioner takes on those responsibilities, and coordinates with other specialists—the CPAs, estate attorneys, mortgage brokers, insurance agents and others—to make sure that your plan is cohesive and in line with your goals and timelines.
The added benefit
I’ve always maintained that the math is the easy part of this job. Anyone can do it, and there’s no reason you can’t do it yourself if you’re handy with a calculator and have the right formulas.
What a spreadsheet cannot offer you is an accountability partner—someone who keeps you on track, cheers you on and makes sure that deadlines are being met and goals are being reached.
We’ve all built a beautiful budget and then let it gather dust in our desk drawer, just like we’ve all started a diet and given it up upon the first whiff of fresh baked cookies. Having an accountability partner keeps you moving towards your finish line, no matter where or when it may be.
Perhaps most importantly, a financial advisor will talk you through decisions objectively when you may want to react with emotion. We’ve all been watching the stock market drop and prices increase, and we’re all experiencing the stress and anxiety that comes with it. But in my three decades of experience in this industry, the biggest mistakes I’ve seen people make come from acting out of emotion rather than logic.
Since your childhood, you’ve been told that you can do whatever you want to do in this world. The key there is want.
If you want to handle your financial planning, you can with enough time and research. But if you don’t want to do it yourself, bringing in an accountability partner to guide you through the process, keep you on track, and handle the day-to-day tasks can be a less stressful way to reach your financial goals.