Working with a Professional

Q: Who should work with a financial advisor or investment manager?

If you feel like you need a high-level overview of where you're at, working with a financial advisor can be helpful.

They have expertise, objectivity, and clear-sighted ability to help you place yourself relative to your financial goals and long-term liabilities. They can help you make estimates around earning power and asset growth between now and whatever timeline you have set for your goals (retirement, paying off a loan, buying a house, etc.). That, in turn, can give you a great idea of how long you need to work, how much you need to earn or pay down, and what factors can move those variables up or down.

That said, I don't know that there needs to be a continuous relationship. I tend to view check-ins with financial advisors like visiting the doctor for a checkup.

For me, the bigger value is finding someone who can do all the above – and more – on your behalf.

Ultimately, basically regardless of specific goals, you want to be an owner. You want to invest. You want to be the beneficiary of companies making smart decisions and going up in value over time. Being an owner is where you can create the most value over the long period of time.

The challenge is that most people aren’t well-prepared to become owners. Even those who have deeply educated themselves about the investing world can struggle. You can read every word that famed investors like Warren Buffet and Charlie Munger have ever written, but if you don’t have the time to do adequate research, due diligence, and market watching – or if you don’t have the patient, discipline, or fortitude to watch your investments sometimes dip – you’ll struggle.

That’s where someone like an investment manager can help. I admit to some bias here, since this is my own role for my own clients. But I don’t think it’s a reach to suggest that this kind of role offers real value to ordinary investors. My clients are better served developing their expertise in their own career areas rather than in the world of investing. They’d rather spend their free time with their families or on personally fulfilling endeavors. And sometimes they’re just honest enough with themselves to admit they aren’t interested in the behind-the-scenes work, don’t have the right skillset, or don’t have the personal discipline or patience required for value investing.

Given the reality of what goes into being a successful investor, sometimes the best decision you can make is to find someone who has that skillset and ride with that person. Better that than to not pursue ownership at all or, worse, pursue it badly.

Admittedly, you want to find someone who works in a way that philosophically makes sense to you. For example, you want to get a sense of how and why the person or service you’re considering invests in the ways that they do. But if you can attach yourself to their approach, that’s where the big money is made.