The main – but not the only – reason someone might need financial, or investment advice is a lack of sufficient knowledge. Although a core curriculum is beginning to form part of secondary education, personal finance management has remained absent from the curriculum of most university majors. In view of the above, self-study is the only resource available to most people. Fortunately, the number of online resources has increased considerably and the quality of some of them is particularly good. Unfortunately, self-study requires time and dedication, not only to gain initial knowledge, but to keep it up to date as the markets, legal framework, and available options evolve.
In a connected way, the next reason is the prohibitive cost of making mistakes when they could affect a sizable portion of the wealth over many years. If such errors of great magnitude can be avoided or minimized through competent advice, substantial savings could be obtained that would more than pay for the cost of the advice.
Another particularly important reason to get advice is the possibility of being more disciplined when someone is accompanying you. It is quite common for savings, debt reduction, and even investment plans to be more sustainable over time if there is someone else who is aware of them. Similarly, staying calm and not straying from the target strategy during situations of high volatility in the financial markets is a goal that is also best achieved when you are accompanied.
Access to the specialized software and databases that financial and investment advisors manage is another reason to get advice. The ability to keep up-to-date records and perform sophisticated analysis quickly and accurately are resources that a client might not be able to do or would be too costly.
An important but little-reported reason is the possibility of having someone with whom to validate plans and goals. A good advisor will try to understand the full situation and make recommendations if they notice that something is not aligned with goals and best practices.
Finally, product vendors often have marketing programs and well-trained sales forces capable of convincing customers that their products are not only the best but will serve to meet their needs. The presence of a trusted fiduciary advisor will help moderate these conversations and select the right product at the best price available.
Those clients who are knowledgeable, disciplined, with adequate resources, with access to colleagues or acquaintances with a proficient level of sophistication, and who can search for and separate facts from fiction in promotional messages, will be better prepared to avoid the use of specialized advice.