Should I Hire a Financial Advisor?

Tyler Gardner (0:00)

Hello, friends. This is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be. On this week's episode, we're going to address the number one question I get asked about money. Seriously, I'm not actually exaggerating that. Should I hire a financial advisor? And a close second question, if so, what the heck am I supposed to look for in this era of wealth management where everyone and their cousin is calling themselves a financial professional? To begin, at its core, I don't think that's really the question we're asking. We're asking if we are on the right track, or if we should be doing something differently with our money. All it ever takes is for us to bump into Shannon down at the grocery store and hear that she's now working with a wonderful new financial advisor, who happens to be the son of someone she met down at the pool. Instantly we begin to doubt our own course of action, and we fear that we might be left behind, especially during times of market volatility. All of us are constantly sharing one true question. We want to know if the grass is indeed greener on the other side, and if it is, how the heck do we get there?

Now, as a disclaimer before we start, as is true with all questions relating to a mass audience or to personal finance, the answer is and always will be, it depends. Additionally, I'm not going to offer you any answers throughout this episode, only more questions to consider. So if you were looking for my official stamp of approval or condemnation one way or another, it's not happening, and what might prove useful for you might be a complete waste of time for your neighbor. I know you hate me so much right now, but bear with me as I promise by the end of this episode, you will have not only a three-step framework to address whether you should work with an advisor, but also the seven things that I personally would look for if I chose to work with an advisor.

And to return momentarily to why I started this podcast, these conversations are extremely nuanced and deserve an extended consideration. So sit back or keep driving or keep lifting weights or whatever you're doing while listening, and let's see what clarity we can offer surrounding the choice of whether to work with a financial advisor or not. Let me frustrate you as early as possible in this episode just to get it out of the way. Working with an advisor might be one of the smartest moves you will ever make, or it might be one of the most expensive and useless decisions you ever make. The key is to begin by understanding exactly what you need, and what you're capable or not capable of doing on your own. So as mentioned above, we'll break this episode into two key sections.

First, we'll explore three questions you need to ask yourself to figure out if an advisor is right for you. And second, we'll explore seven questions that you need to ask an advisor to see if they're the right one to work with you. When I was a portfolio manager, we used to ask potential clients one question, broken into three parts, to help them decide whether they needed or should work with us. It's been echoed across every major brokerage firm, not because it's catchy, but because it's true. Do you have the skill, will, and time to manage your own money? Let's explore each one a bit further. Number one, do you have the skill? Since Jack Bogle founded Vanguard in the 70s, investing has become, for all intents and purposes, relatively democratized with quick access to index funds, ETFs, and free online tools and resources, it's never been easier to build out a decent portfolio based on your risk tolerance and your values. And yet, many of us still want a second set of eyes. How do I know this? Because even current hedge fund managers and investment professionals get in touch with me at times, asking if I'd consider looking over their allocation strategy just to be sure they aren't missing anything. That's normal. You're not being insecure. You're being prudent, as I certainly hope you would be with your investable assets. I would be way more worried if you went through life not ever wanting someone else to check your work and make sure you were on the right track for you. Personally, I was lucky. I learned how to invest across asset classes early in my 20s from top-tier mentors. Then I read and studied obsessively for two decades. And ultimately, as you know, became a portfolio manager. But I never forget, most of you did not share that path with me. So returning to beginner's mind matters. And in today's world of finance influencers and TikTok money experts, and yes, I'm putting experts in quotes, it's really easy to get overwhelmed, and it's even easier to be misled, intentionally or unintentionally.