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Should you embrace DIY financial planning or hire a pro?

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6 mins

Ask a baby boomer what the slogan of the investment firm E.F. Hutton was during the 1970s, and they’ll readily respond, “When E.F. Hutton speaks...people listen.” If they wanted investment advice, they would make the trek down to the broker’s office and open an account.

The brokerage that has created all the buzz in 2021 is found online — Robinhood. Its stated mission is to “provide everyone with access to the financial markets, not just the wealthy.” Their app has propelled them from having 500,000 users in 2014 to 22.5 million in 2021.

Do-it-yourself (DIY) personal finance and financial planning have taken root, and there are no signs of them slowing down. The majority of millennials and Gen Z’ers are proving that using an app on their phone instead of using a professional is their preferred method of managing their finances.

Why are so many people embracing DIY financial planning?

Our current era of DIY has been called “The Golden Age of Investing.” The perfect storm of the Internet, no-fee investment apps, and discount brokerages have created a wave of wealth for some and a tale of woe for many professional advisors.

What is it about managing your own finances that has made it so attractive to so many people? Here are five reasons to consider:

  • Lower cost. The number one reason many people are now financial DIYers is cost savings. Meeting with a Certified Financial Planner and having them develop a personal financial plan for you can easily cost $2500 or more. Many of the same tools that planners use are available on the U.S. Securities and Exchange Commission’s website at no cost.
  • Information is readily available. Want to know how a 529 plan can help you fund your children’s education? Would you like to see how much money you’ll need at retirement to live comfortably? Want to have your mutual funds analyzed?

All of these questions can be answered, and so many more, by reading articles online, watching YouTube videos featuring financial pros, taking an online class, even the old fashioned way of reading books written for people exactly like you.

  • It’s relatively easy to do. There is an abundance of online tools to help you put a financial plan together, as well as financial software and workbooks you can buy to chart your own course.
  • It doesn’t require a lot of time. You don’t need to have multiple meetings with a financial planner, and you can do it when it’s convenient for you.

At Investopedia, you’ll find a blueprint for becoming a “self-taught finance expert.” It offers helpful advice on how to methodically get your financial education at your pace.

  • It’s fun. One of the reasons online trading has become so popular is that people can get an adrenaline rush every time they hit the “buy” or “sell” button. Some stocks that trade frequently have even been called “adrenaline stocks.”

But, financial planners and advisors won’t become extinct.

[ Related read: 13 personal finance tips to master your money in 2021 ]

Determining if you want to hire a pro

Ask a financial planner why you need them, and they’ll have no shortage of reasons. Here are a few questions you can ask yourself to help you decide if you’d like to bring one aboard.

Will I really do it?

Being your own financial guru takes time and effort. If you’re working full-time, have family and community obligations, and have hobbies you enjoy that keep you busy, how realistic is it that you’ll take the time to get up to speed on personal finance? Will you regularly read up on the latest tax law changes that could affect your retirement plans, changes to social security, or new investments that could reduce your risks or boost your returns?

Do I want to learn about complex financial products?

If you’ve spent any time reading up on cryptocurrency, you probably realize how complicated it is, that it has its own language, and that you can’t spend it everywhere. But, what might you not know that is keeping you from either missing out on a golden opportunity or avoiding a financial nightmare?

Does the cost savings of DIY outweigh the potential benefit?

You’ve probably heard of the saying, “Penny wise and pound foolish.” It’s often used to describe something that will save a small amount of money now but cost a large amount of money in the future.

This can easily be applied to managing your money. You might not pay a management fee on your investments by handling it yourself, but is it worth potentially missing out on much larger returns?

Can I remain emotionally detached from my finances?

If you find it difficult to make objective financial decisions, being a financial DIYer may not suit you.

For example, if you’ve sat down and analyzed your budget and net worth recently, were you unable to emotionally detach yourself from any asset or expenditure that is not helping you reach your financial goals?

If you haven’t assessed your financial plan lately or don’t have one, now is a great time to choose to follow your own plan or have a professional design one for you.

Unless, there is another choice?

A hybrid approach to financial planning

Have you ever self-diagnosed a health concern, say an allergy, but still went to see your doctor for a consultation, diagnosis, and prescription?

You can do the same with the management of your personal finances. If you feel inclined to do it yourself and get into an area where you think you’re in over your head, you can always seek professional guidance. Many financial advisors out there will answer questions you have, though you may have to pay a fee to get the advice.

The world of personal finance keeps expanding with new products, strategies, and technology, and it doesn’t look like the pace of change will slow up anytime soon. So, grab the reins tight if you’ll be taking or keeping control of your personal finances, or move over and let a pro sit beside you on your financial journey. Either way, you can get where you want to go.

Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published November 4, 2021
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