What’s your relationship with your money?

During my 24-year career as a financial advisor, I saw just about everything you could see in the financial world. One area that intrigued me was the relationship people had with their money. Some folks guarded their money like it was their last dime whereas a lot of people had a rather distant relationship with their funds.

Investors fall into two categories:  DIYer’s and those that use a financial advisor.

Let’s look at the DIYer’s first. A DIY investor is one that makes their own investment decisions often times using no-load mutual funds like Vanguard, Fidelity and T. Rowe Price. They also might have an E-trade account where they buy their own stocks.  These investors are driven to manage their own money and to have absolute control on how their funds are invested and often save on fees.

I’ve told many people over the years that if you have the time and the knowledge, you should be investing your money on your own. Nobody cares more about your money than you do.  Let me say that again, nobody cares more about your money than you do. Let that soak in.

In the DIY crowd, there are two subcategories to examine. The first group are the folks who take control of their money, do the research, place the trades, actively follow their investments with a goal in mind.

This is the way DIY investing should be done.

The second group of DIYer’s are the ones who take advice from there brother-in-law, throw their money into some funds and stocks and sets it on automatic pilot to only glance at the statements once or twice a year. No Bueno. If this was your spouse, they would be divorcing you soon. You don’t want to treat your money this way. You’re asking your money to carry you through 30+ years of retirement but you only check in on it every so often? Like I said, no bueno.

The second category are investors who are using financial advisors. You hire a financial advisor to manage your money. I always viewed it as a partnership; I wanted my clients engaged, asking questions and understanding exactly what they were invested in, how they were doing, what fees they were paying and how on track we were to hit their goals.  Your relationship with your financial advisor should be a partnership as well. It’s your money and you are entitled to know every detail and be engaged in the process if you choose. If you have an advisor playing keeping away or trying to dodge questions around fees, then it’s time to find a new advisor. But I don’t want to be too harsh. More often than not, people using advisors have a great relationship, they know where they’re invested, the fees they’re paying and the details of their financial plan.

However, there are people who use advisors that pay very little attention to how their money is doing. I’ve had folks come into my office and they push their account statement from another firm across the table to me. Before looking at their statement, I’d ask them how they thought they were doing? It amazed me that many had no idea how they were doing and what they were invested in. A staggering number of them thought their advisor was charging them nothing to manage their money so imagine their surprise when I pointed out to them how much they were paying the advisor.  Heck, a large number of them how no idea even how much risk they were taking. At the end of the day, there are a large number of people using financial advisors that do not participate in the process. Like the DIYer’s on automatic pilot, you’re taking a great risk not being involved in your money decisions.

It’s often said they people spend more time each year planning their vacation than planning their finances. This has always shocked me. 

If you have a solid engagement with your money, congratulations. You’re doing an awesome job.

If your money is on automatic pilot, whether you’re doing it yourself or have an advisor, now is the time to get reacquainted. Get involved and stay involved. Your retirement will thank you later.

Live free my friends