This is a rather simple but overlooked aspect of investing — and that is making sure that when you work with any sort of professional (Lawyer/Accountant/Manager/Planner) you get your money’s worth.
10. When Paying Fees, Get What You Pay For: It always surprises me how much money some people are willing to throw at people like me to manage their financial affairs — whether its necessary or not.
For the professionals who charge by the hour (Lawyers and Accountants) avoid chatting or dawdling on the phone. When they take you out to lunch, expect tat you are actually paying the bill — either your account is charged for the tab or the time is billed. Make it business, not social.
And when retaining a financial professional, make sure your fees cover a variety of the services you actually need.
For some people, hiring a pro can make sense. If you have a more complex financial situation — perhaps you may have a complicated tax issue, or may be looking at a generational wealth transfer. These sorts of issues are often best served with a competent professional managing them.
We have lots of clients who are too busy running their own businesses and do not have the time to manage their own investments. And as noted in many of our prior points (1-9), a lot of folk simply lack the temperament and discipline to deal with stress and emotions of capital markets. If that describes you, paying someone to run your assets or at least facilitate your investing and income management makes sense.
But for many others, they might be better off simply dollar cost averaging into a group of broad indices and saving the 1-2% annual fees.
Consider what sort of help you really need, and find someone competent to assist you in your financial planning. If your needs are straightforward and simple, you might be able to do it yourself and save the fees.
Top 10 Investor Errors
- High Fees Are A Drag on Returns
- Reaching for Yield
- You (and your Behavior) Are Your Own Worst Enemy
- Asset Allocation Matters More than Stock Picking
- Passive vs Active Management
- Mutual Fund vs ETFs
- Not Understanding the Long Cycle
- Cognitive Errors
- Confusing Past Performance With Future Potential
- When Paying Fees, Get What You Pay For