Hiring An Investment Manager: Is It Worth The Cost?

If you're wondering whether to hire an investment manager, you're not alone. Many people question whether they should manage their own investments or enlist the help of a professional. While it may seem unnecessary to hire an investment manager, there are several compelling reasons to consider doing so.

Firstly, investment managers have the expertise and experience to guide you in making sound investment decisions. They can help you navigate the complex world of investing, providing valuable insights and advice based on their knowledge and research. This can be especially beneficial if you're new to investing or don't have the time or inclination to conduct thorough research yourself.

Secondly, investment managers can provide much-needed discipline and accountability when it comes to your investment strategy. They can help you stay on track with your savings and investment goals, ensuring that you don't fall prey to common pitfalls like trying to time the market or making impulsive decisions based on emotions.

Additionally, investment managers can offer a more comprehensive range of services than you might be able to access on your own. These services can include institutional investing, investment tax planning, account asset management, tax-loss harvesting, and retirement planning. By leveraging these services, you can ensure that your investments are well-diversified and optimised for both short-term gains and long-term financial health.

Furthermore, investment managers can be incredibly valuable if you have a large or complex portfolio that is challenging to manage on your own. They can help you identify new opportunities, make informed decisions about buying or selling, and ensure that your investments are aligned with your financial goals.

Lastly, investment managers can provide peace of mind by ensuring that your investments are safe and well-managed. They can also help you avoid costly mistakes that many investors make, such as investing too much in underperforming stocks or failing to diversify their portfolio adequately.

While there may be concerns about the cost of hiring an investment manager, the benefits can often outweigh the fees. By working with a professional, you can gain access to a wealth of knowledge, opportunities, and support that can help maximise the growth of your investments and give you confidence in your financial future.

You don't know where to start

If you don't know where to start, hiring a financial advisor or investment manager can be a great way to get your investments off the ground. The hardest part of investing is often taking that first step. With so many investment options available, it can be overwhelming for beginners to know where to begin.

A financial advisor can help you create a financial action plan and set up a risk-appropriate investment portfolio. They can also advise on how to continuously and quickly invest cash in your investment accounts. For example, you might be tempted to try and time the market with your cash, but a financial advisor will encourage you to keep your cash invested continuously and quickly.

It's important to remember that you can always drop your financial advisor once you feel comfortable enough to manage your own money. In the meantime, they can help you to avoid missing out on gains by holding onto the majority of your portfolio in cash during a bull market.

If you're unsure about where to start with your investments, a financial advisor can provide valuable guidance and support. They will help you to make informed decisions about your financial future and ensure that you don't miss out on valuable investment opportunities.

You're too busy to manage your investments

If you're too busy to manage your investments, hiring an investment manager can be a great option. Here are some reasons why:

Time-Saving and Convenience

Hiring an investment manager can save you time and provide convenience, especially if you have a busy schedule or other commitments that demand your attention. They can handle the day-to-day management of your investments, allowing you to focus on other priorities.

Expertise and Guidance

Investment managers are professionals who have the expertise and knowledge to guide you. They can help you navigate the complex world of investing, providing advice on investment strategies, portfolio construction, and risk management. This guidance can be invaluable, especially if you're new to investing or don't have the time to dedicate to researching and staying up-to-date with market trends.

Continuous Investment and Action

An investment manager will ensure that your cash is continuously and quickly invested across your accounts. They will help you avoid the pitfall of trying to time the market and missing out on potential gains. Additionally, they will facilitate timely execution of investment decisions, ensuring that you don't delay in taking action on important financial matters.

Accountability and Discipline

Working with an investment manager provides accountability and helps you stay disciplined. They will keep you on track with your savings and investment goals, providing that extra layer of discipline to ensure you don't deviate from your financial plan.

Emotional Support and Thinking Partner

A good investment manager will act as your thinking partner, helping you make rational investment decisions by providing an objective perspective. They can help you navigate the emotional aspects of investing, such as fear and greed, and ensure that your decisions are aligned with your financial goals and risk tolerance.

Access to Opportunities and Resources

Investment managers often have access to a wider range of investment opportunities and resources. They can introduce you to new trends, strategies, and investment options that you might not have otherwise considered or had access to.

Tax and Retirement Planning

Investment managers can provide valuable assistance with tax planning and retirement planning. They can help you structure your investments in a tax-efficient manner and ensure that your portfolio is optimized for your retirement goals.

Peace of Mind

Hiring an investment manager can give you peace of mind, knowing that your investments are being professionally managed. This can reduce stress and allow you to focus on other aspects of your life, such as your career, family, and hobbies, without constantly worrying about your investment portfolio.

Money stresses you out

If you find yourself constantly stressed about money, it may be beneficial to hire an investment manager to help you manage your finances. Here are some reasons why:

You'll have someone to keep an eye on your money

During volatile economic times, it can be reassuring to know that a professional is managing your finances. When the market takes a downturn, it's easy to panic and make impulsive decisions that may negatively impact your portfolio. An investment manager can help you avoid these impulsive decisions and provide a sense of stability for your financial future.

You'll have help managing your stress

Money can be a significant source of stress, especially if you're constantly worried about your investments. By hiring an investment manager, you can offload some of that stress and gain peace of mind. This can positively impact not only your mental health but also your relationships with your partner and children, as your stress levels decrease.

You'll have a thinking partner

An investment manager serves as a thinking partner, helping you make informed and rational decisions about your portfolio. They provide a framework for investment choices, considering the tax implications and your financial plan rather than emotional impulses. This can help you avoid costly mistakes driven by fear or greed, which are common drivers of investment decisions.

You'll have help staying accountable

An investment manager will help you stay accountable to your savings and investment goals. They will work with you to set goals and create a financial plan to achieve them. When things don't go according to plan, your investment manager will be there to help you course-correct and make necessary adjustments. This accountability can help you stay on track and avoid financial blind spots.

You'll have help making progress

Investment managers are professionals who can help you turn your financial decisions into action. They will assist you in executing your plans in a timely manner, whether it's rebalancing your portfolio, making allocation changes, or reviewing fund expenses. With their help, you'll be able to move forward confidently and efficiently.

You need help with tax and retirement planning

If you need help with tax and retirement planning, a financial advisor can be a valuable asset. They can help you map out a financial strategy for the future, including retirement, and offer advice on how to handle financial matters such as buying a house, saving for a child's college education, devising a tax plan, purchasing insurance, and creating an estate plan.

Retirement advisors can help you develop a personalised financial plan to meet your retirement goals, including saving money, investing money, and managing debt. They can also provide guidance on investment management, including choosing the right investments for your retirement portfolio and rebalancing your portfolio as you approach retirement.

When it comes to taxes, a financial advisor can help you minimise your tax liability in retirement and plan for income taxes on your pension and other retirement income. They can also advise on tax-efficient strategies for gifting assets to your children and help you understand the tax implications of various financial decisions.

Developing a Retirement Plan

Retirement advisors can assist in creating a comprehensive retirement plan tailored to your unique circumstances. They will consider factors such as your age, desired retirement age, income, expenses, and financial goals to develop a strategy for saving and investing. This plan will outline how much you need to save and invest to achieve your retirement goals.

Investment Management

Financial advisors can guide you in choosing the right investments for your retirement portfolio, taking into account your risk tolerance and financial objectives. They can also advise on when to rebalance your portfolio to account for market changes, ensuring your investments remain aligned with your retirement goals.

Tax Minimisation Strategies

Financial advisors are well-versed in tax laws and can help you minimise your tax burden in retirement. They can advise on tax-efficient ways to withdraw money from retirement accounts, as well as strategies to reduce taxes on pension and other retirement income.

Estate Planning

Financial advisors can assist in creating a plan for managing your assets after your death, including will preparation, naming beneficiaries, and setting up trusts. They can also help you gift assets to your children in a tax-efficient manner, ensuring your legacy is protected.

Accountability and Motivation

A financial advisor can provide accountability and motivation to help you stay on track with your savings and investment goals. They will monitor your progress and make adjustments as needed to ensure you are on course to meet your retirement objectives.

Expertise and Peace of Mind

Financial advisors are experts in their field, providing you with peace of mind that your finances are being managed effectively. They can simplify complex financial concepts and help you navigate the world of securities, insurance, and retirement planning.

While you can manage your finances on your own, a financial advisor offers specialised knowledge and a long-term perspective to help you make the most of your money, especially when it comes to tax and retirement planning.

You want to avoid costly mistakes

One of the biggest reasons people lose money in the stock market is because they make costly mistakes. Hiring an investment manager can help you avoid these mistakes and protect your money while building wealth for your future.

People often invest too much in stocks that fail to perform or don't diversify their portfolio enough. Sometimes, they take advice from a friend or neighbour. All of these can lead to significant losses.

Investment managers have the experience and expertise to know which stocks are likely to perform well. They also have access to research that the average person does not, meaning they can make investment decisions based on sound data and analysis rather than guessing or taking risks.

A good investment manager will also help you stay accountable to savings and investment goals. They will help you stick to your investment plan and course-correct when things don't go according to plan.

With an investment manager, you gain a thinking partner who can provide context and help you make investment decisions that reflect your financial goals. They can also ensure your portfolio is well-diversified and help you avoid common pitfalls.

In short, hiring an investment manager can provide valuable guidance and expertise to help you avoid costly mistakes and grow your wealth effectively.

Frequently asked questions