“Do your homework or hire wise experts to help you.” Sir John Templeton

A parable:  A man who had a lot of money and no experience entered into a business partnership with a man who had a lot of experience and no money.  When it ended the man with the experience had the money and the man with the money had the experience.  Tough way to gain expertise!

I received a referral from a friend and so one afternoon in my office I met with an elderly woman and her two daughters to discuss her financial situation.  It was in the midst of the economic crisis last year and her account had gone down.  But even in the previous good years it had virtually gained nothing.  As we sat in my conference room with the late afternoon sun shining through the windows, she said, “And if that isn’t bad enough I’ve tried to get in touch with my adviser several times.  He never calls back.”

Then one daughter spoke up, “We even drove to his office.  And as we came in the front door he looked up, saw us and headed out the back door.”

I’m thinking, “Not a good sign!”

We talked for an hour discussing her goals and I collected the information I needed.  Then we set a time to meet  in a couple of weeks to go over some plans.

When we met again we chatted and then I showed her the issues.  I said, “You’re invested in a way that likely will never return much because of how it’s structured.  Yet because of the product you bought you’re at risk of losing everything should the company you’re invested with go under.”

We discussed other strategies that would better meet her needs and help protect her.  Then she asked, “What are your fees?  How do you get paid?”

We discussed them and I showed her the hidden fees she is already paying.  Then we set a time to get together again to detail the plans.

A few days later she called and said, “I’ve decided to stay with the adviser I have because I don’t want to pay the fees.  It’s just too much money.”

I responded, “You remember the hidden fees you’re already paying?“

“Yes.”

“And how after my fees you would have been far ahead of where you are now?”

“Yes.”

“And the level of service we provide?”

“Yes, I know.  But it’s just too much money,” she responded.  “I just don’t want to pay fees.”

“Well ok.  Hope it works out.”  I said goodbye and hung up.

Hey, none of us like paying fees that we don’t need to. But I’ve watched people, with no expertise, get hung up on paying someone to help them with one of the most critical areas of their lives.  They try to do it themselves by subscribing to a few magazines, watching the financial news and reading some blog articles. They think, “I can do this.  And look at all the money I’ll save.”

Then they jump in and by the time it’s over what they have left is only experience.  And the irony?  The little bit they would have paid a competent, trustworthy adviser is cheap in comparison.

The bible says, “Plans fail for lack of counsel, but with many advisers they succeed.” (Proverbs 15:22, NIV)

Investing is complex and filled with hazards.  The consequences are huge for you and your family.  Why would you tackle it on your own unless you have the expertise?

You have two choices if you want to be successful with your financial future. Two questions to ask yourself.

First, “Am I an expert in investing and financial planning? If not, am I willing to spend the time and money to truly get educated?”  If you answer no to both questions you’re only kidding yourself about how it will turn out if you self medicate.  Many people invest on their own successfully but they paid the price to get educated first and gained experience a little at a time.  Getting educated by experience alone can be extremely costly.

Second, ask, “If I am not going to become an expert then who will I hire to help me? How will I find this person who I can trust is experienced and honest?”  This is one of the most critical decisions you will make about your financial future.  If you choose well it will make all the difference.  If you choose poorly it can be a disaster.

The complete answer to question two is a whole other blog or personal conversation.

Are you going to gain expertise or ask for help?  Do you want to be the person with the money or the experience?  It’s your choice.  Choose well.

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Important Disclosures:

Douglas Armey, the LPL Financial adviser associated with this website, practices in Fresno, California and may discuss and/or transact business only with residents of the following states:  California, Idaho and Oregon.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results.

Securities offered through LPL Financial, Member FINRA/SIPC.  Member of Securities Investor Protection Corporation (SIPC).  For an explanatory brochure please visit www.sipc.org.          www.finra.org