I recently ran across this response to a question by Walter Updegrave at CNN Money. We concur with the following excerpt from his response about the dangers of going it alone:

“The answer depends largely on how comfortable you are going it alone—and how good a job you think you could do overseeing your finances without help from a pro.

Let’s start with one key aspect of retirement planning: investing. As long as you’re familiar with the concept of asset allocation and you’re comfortable picking funds, you shouldn’t have trouble building a diversified portfolio on your own.

And you can get plenty of assistance short of hiring an adviser: These days most 401(k) plans provide tools to help you assess your investing options and assemble an appropriate lineup for your age and risk tolerance.

You can also find plenty of guidance online.” ….

“The problem is, if you screw up, you can end up losing a lot more than you might save. In a recent study, benefit consultant Aon Hewitt and advice firm Financial Engines looked at the 401(k) returns of more than 425,000 savers from 2006 through 2010.

The findings: The median annual return of those who got professional help was almost three percentage points higher than the return for those who invested on their own, even after taking fees into account.

One reason for that performance gap is that the investors who flew solo were far more likely to be too aggressive or too conservative. Emotions also played a role: Do-it-yourselfers were more apt to cash out of stocks in the 2008 crash. As a result, their returns lagged substantially when the market rebounded in 2009.” …

“While you’re saving for retirement, you have plenty of free tools to guide you, plus low-cost access to professional help through target-date funds. But as you near the end of your career, the stakes go up.” …

Your best option may be a financial planner. Hiring an adviser is never your only choice, but at this late stage it can be an especially wise decision.”

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