Making the Switch: From DIY Investing to Trusting a Financial Advisor

As fee-only financial advisors in Greenville, SC, we work with many professionals, executives, and business owners who have been self-managing their wealth for some time. Whether it was a sense of control or the thrill of managing their financial destiny, it was something that they enjoyed doing.

But there often comes a time when the complexities of the financial world demand expertise that only an experienced financial professional can provide.

This blog will review why people transition from DIY (Do It Yourself) investing to working with a fee-only financial advisor. We’ll also provide tips for selecting the right financial advisor. Let’s get started.

Read our Quick Guide: “Finding a Financial Advisor in Greenville, SC.”

Is it time to hire a financial advisor?

Recognizing when to seek the expertise of a financial advisor is pivotal to pursuing your long-term goals for financial well-being and security. There are several reasons why DIY investors move their serious assets to a fiduciary financial advisor. Here are a few of those reasons.

1. As your financial situation becomes more multifaceted and complex, managing it can require increasing expertise.

2. As your wealth grows, so does the time commitment required for effective management. Your career is demanding enough, leaving you with limited bandwidth for active financial management.

3. An estate plan ensures your wealth is transferred to your loved ones upon passing. Not having an estate plan in place can cause heartache for your family and potentially reduce your estate's value if proper tax planning has not been considered.

4. The more assets you have, the more time and knowledge it takes to navigate complex tax laws and create a tax-efficient investment strategy for your wealth.

5. Are you monitoring your risk exposure appropriately as your capacity to take risk or tolerance changes over time? Events like marriage, divorce, loss of a spouse, or business sale can drastically change your risk profile.

6. Are you diversified enough based on your financial needs, goals, and risk tolerance? If appropriate, are you using a global investment strategy and various asset classes to minimize your risk of significant losses?

7. As your retirement approaches, have you developed a comprehensive plan that looks at all aspects of your financial situation during transition and retirement?

8. Does your spouse feel comfortable managing your assets if you were to pass unexpectedly, or do they need a trusted advisor relationship before the unexpected occurs?

9. Are you tracking your performance regularly? Do you look at gross or net performance? Is your rate of return meeting or exceeding expectations?

10. If you own a business, do you consider the impact of your financial decisions on employees and yourself?

Global View Perspectives: While many self-made professionals and entrepreneurs pride themselves on autonomy, there's undeniable value in seeking experienced financial guidance when managing substantial wealth and complex financial situations. You want an advocate who can use their experience and knowledge to help safeguard your assets and maximize the achievement of your long-term financial goals.

Finding the Right Financial Advisor

If you’ve decided to work with a financial advisor in Greenville, here are a few steps to help you select the right firm or professional.

Before seeking the services of financial advisors in Greenville, SC, you need to clearly define your financial goals and objectives. What type of advice and service(s) are you looking for? Retirement planning, asset management, tax optimization, or estate planning? You can better select an advisor specializing in those areas by understanding your needs.

Are the advisors you are considering acting in a fiduciary-only capacity? A fiduciary in Greenville, SC, is held to the highest ethical standard in the industry and must always act in your best interests. If the advisors you speak with describe their services in any other way other than fiduciary-only and fee-only, you are working with a salesperson who may only be interested in transactions. You can verify if the advisors you are considering are registered with the proper regulatory bodies and have the requisite qualifications to advise you.

After narrowing down your options, schedule meetings with investment advisors in Greenville, SC. Inquire about their financial planning approach, their investment philosophy, and the range of services they provide. It's a perfect opportunity to match their expertise and knowledge to your needs.

Understanding how your financial advisor will be compensated for their services is also an essential component of your advisor search:

The Fee-Only Financial Advisor:
- Advisors are compensated solely through fees paid by clients and not third parties.
- There are three main types of fee-only programs: Asset-based, fixed, or hourly.
  - Most advisors charge an asset-based fee that is billed as a percentage of assets under management.
    - A common asset-based fee is 1% to 1.5%.
  - Fee-only will minimize potential conflicts of interest by aligning the advisor’s pay directly with the client’s outcomes and avoiding compensation from third parties (i.e., Insurance commissions, 12B-1 fees, revenue sharing, referral kickbacks, trailing investment commissions, etc.)

Commission-Based:
- Financial advisors may also be paid commissions for their recommendations and services by third parties (noted above)
- Sales centered vs. client success centered.
- Some argue this can create potential conflicts of interest because advisors may be incentivized to recommend products that pay higher commissions rather than what's best for the client.
- This model is less popular than in the past due to the rising knowledge of investors and the appeal of financial fiduciaries.
Fee-Based (Fee & Commission):
- A mix of both fee-only and commission-based structures.
- Sales centered vs. client success centered.
- Advisors might charge fees for some services while receiving commissions on product sales that occur inside the service.
- This model has potential conflicts of interest like the commission-based structure but with the added complexity of fee-only services for certain services.

As a DIY investor, you've developed a particular investment style you may adhere to. The right Greenville fiduciary advisor should be able to tailor their recommendations to suit your preferences, ensuring a smooth transition.

As a side note, crystal clear communication is paramount in any relationship with a professional, when your future financial future is at stake. Ensure your advisor meets with you regularly and provides reports documenting your financial well-being. You should expect a higher level of service and communication when the markets are volatile.

Trust is fundamental in a relationship with a financial advisor. Establishing a positive working relationship with your financial advisor in Greenville, South Carolina, is essential. Compatibility in communication styles, trustworthiness, and understanding of your needs are paramount in this relationship. You want your advisor to serve as your financial advocate.

Once you've chosen an advisor, transitioning your invested assets is the next step. The advisor should guide you, whether selling, transferring, or adjusting your holdings, to align with a strategy that matches your objectives.

While your advisor manages the day-to-day aspects of your wealth, you need to stay involved. For example, regular reviews of your financial plan to ensure it remains consistent with your month-to-month results.

Switching from DIY investing to trusting a financial advisor in Greenville, SC, can be a significant change for you. It may take time to adjust and see the outcomes of the new strategies that are put in place. Have patience and trust the process.

Global View Perspectives: We founded Global View because investors need an advocate. Only by being your advocate does our advice meet our client’s expectations. We want to give you honest, objective financial advice that helps you avoid common financial mistakes that are made by many DIY investors. Connect with us today to learn about our Greenville wealth management services.