Submitted by nsscadmin on
It’s Investor Education Month, so what better time to review the pros and cons of three of the most common ways to invest – with a financial adviser, with a robo-adviser, or by taking the DIY route. There’s no one way to invest that suits everyone. That’s why investors have these options. In fact, investors don’t even have to choose one. For example, they can choose to invest their money with an adviser while also participating in DIY investing as well. When trying to decide which investment path is best for you as an individual it can help to look at some of the pros and cons of each. This isn’t a fully extensive list but includes some of the key pros and cons you’ll want to consider.
Let’s start with the pros and cons of investing with a financial adviser.
Pros:
- Can provide face-to-face service to meet an investor’s individual needs.
- Can often help clients develop a financial plan as well as offer investment advice and products.
Cons:
- Typically, financial advisers will have higher fees than the other options.
- Advisers may have product biases if they are affiliated or work for a financial institution.
Best for someone who:
- Has limited time, interest, financial knowledge or experience.
- Is looking for a more comprehensive financial plan and bundled services from a professional.
- Wants personalized feedback and service.
Next, we’ll look at investing with a robo-adviser.
Pros:
- Usually charge lower fees than an in-person adviser
- Offers a balance between working with a financial adviser and DIY investing.
- Delivers well-diversified and balanced portfolios.
Cons:
- Often lacks customizable options.
- Must be comfortable with online tech to use.
- No in-person connection (may be a pro for some people).
Best for some who:
- Comfortable with starting and managing their investment portfolio without human interaction.
- Is open to utilizing an investment portfolio created through algorithms as opposed to a personalized approach.
Finally, let’s finish off with DIY investing.
Pros:
- Usually, the lowest cost option when it comes to fees.
- Full control over all investment decisions.
- Able to try many different investment strategies.
Cons:
- Requires significant knowledge and time.
- Emotions can lead to rash, impulsive decisions.
- Mistakes and unsuitable investments can be very costly.
Best for some who:
- Understands the fundamentals of investing and wants to be hands-on with their investment portfolio.
- Has the time to adequately manage their own portfolio.
- Wants to deploy and manage their own investment strategy.
There’s no one way to invest that fits everyone’s financial situation and personality. If you’re getting started in investing or maybe just reviewing your current investment methods, be sure to carefully analyze the pros and cons and characteristics of each investing method to determine which is right and best for you. And remember, you don’t have to choose only one method.