“What goes on four feet in the morning, two feet at noon, and three feet in the evening?” Riddle of the Sphinx
You’ve probably heard the riddle before. If not, the answer is “man.” Childhood on hands and knees, two feet after that, and then the addition of a cane in old-age. It illustrates the change over time to something so fundamental to us-–mobility. How we do things can, and often do, change over time.
As we reach adulthood, something similar happens. We take on lots of responsibilities. Some we know while others are new. As we age new things come while others go. Homework gives way to the work. Renting gives way to homeownership. Staying out late gives way to staying up late with a sick child. What activities we do ourselves often depends on our knowledge, time, finances, and the cost of an error. If we know it, and have time, we might do it. If not, or an error would be costly, we might have others do it. My dad owned a gas station and taught me a number of things. But not how to repair brakes. His reasoning? The consequences of doing it wrong are too high, so pay a pro.
Handling our finances can change over time. When we’re young, relatively poor, and life is simple, we do things on our own. We choose investments, benefits at work, and do our own taxes. By middle-age, some we do (benefits selection), some we’ve outsourced (taxes), and some we may still do but don’t like or feel comfortable doing. Retirement passes even more to others (financial/estate/investment planning). Like car brakes, there’s more to lose now (literally) and it’s harder to recover from mistakes.
In the world of finances you really can “have it your way.” You can self-invest at Vanguard, Ameritrade, etc., buying and selling to your heart’s content. Conversely, you can put all your money into a Target Date fund and let the managers do all the work. Maybe a collaborative relationship with an adviser sounds better, where you work together to set goals, implement plans to achieve them, chose and monitor investments, etc. Some folks stick with one pathway while others find their views change over time. As accounts grow, or complicated decisions emerge, doing it yourself may become scary. It can be hard, though, to make the transition to working with someone- even if you think it might be beneficial. It usually comes with a cost. But, outside professionals have value. Our situation is new to us–it’s the first time we’ve been this age or stage of life. But they’ve seen lots of folks at this stage. We know our line of work, but they have knowledge of theirs–and that’s what we need. A neutral party can help sort out thorny issues we’ve ignored–possibly removing an impediment to moving forward. And–just maybe–they’ll have a different perspective that might help us do something we thought we couldn’t (or avoid something we shouldn’t).
As for advisers, there are still generalists (look at the whole picture) and specialists (focus on one area). Both can be helpful. Just make sure you choose who you really need. If you need retirement planning help but your adviser is paid to sell insurance or investments–retirement planning may just be an ancillary service. Only want a stock-picker, then a holistic financial planner who looks at the big picture might be inappropriate.
As the New Year approaches, financial resolutions are common, as is the realization that retirement or other long-term goals are a year closer to being realized–or not. If you have a resolution to get your financial house in order, or to get help navigating difficult decisions or avoiding errors, consider a relationship with a qualified, caring adviser who can provide knowledge and support as you navigate an ever more complicated life.
It’s your choice: Done by you, done for you, or done with you.
Todd Washburn, CFP®
Todd Washburn Solutions, LLC Fee-only financial planning
“Life Planning for Visionary People” email@example.com