The Perils of Do-It-Yourself Financial Planning

Perhaps you�ve heard Suze Orman, the omnipresent financial personality of our era, tell audiences that no one is better qualified to manage their money than they are. �Whether you want to believe it or not, you and you alone have the best judgment when it comes to your money,� Suze writes in The 9 Steps to Financial Freedom.

Suze�s message appeals to people, and I run into folks every day who have taken her words to heart. Like most people in the Baltimore-Washington area, these people are well-educated and well-read. They assume personal finance isn�t rocket science, and anyone who reads Money magazine should be able to stay on top of their own investments. Why pay a financial advisor to help with something that is mostly common sense?

But, in my years of working with clients, I�ve found that few people truly manage their own finances well. Most have made costly mistakes that an experienced financial advisor could have helped them avoid. The most common errors include:

Making emotional decisions about investments.
Successful investing requires steadfast adherence to a consistent long-term strategy. Buying trendy, hot stocks out of greed has cost countless people dearly in recent years. Falling in love with stock picks and holding on long after they should have been sold has also hurt many investors. How many of Enron�s stockholders do you suppose clung to a belief that the company would turn around and they would be richly rewarded for their investments in it?

Selecting the wrong savings vehicle. 
Should you be invested in mutual funds? Individual stocks and bonds? Folios? Annuities? Is cash value life insurance a good investment? Are 529 plans superior to UGMAs or Education IRAs for college savings? Simply reading the financial press won�t help clear up the confusion; too many of the articles are written by agents and brokers who make their living by selling one or more products. Every week there�s another new product pitched as the solution to every problem.

Failing to take critical actions. 
It�s hardly news that the tax code is ridiculously complex and that the rules change every year or two. At various points in your lifewhen you change jobs, get married, retire, or reach specific agesyou may need to make important, often irreversible, decisions affecting your financial future. Failing to decide or choosing incorrectly can be a mistake you�ll spend years paying for.

Underestimating future needs. 
It�s easy to say that we�ll spend less next year or to imagine that we�ll live more frugally in retirement. Or that college tuition can�t possibly keep rising at such a rapid rate. It�s tempting as well to assume that the good old days of the late 1990�s will return, and earnings of 20% or more each year will enable us to achieve our goals. Reality isn�t always so kind.

Your BWFA financial advisor can save you from these pitfalls and more. We�ll charge a fee for our services, but will be worth our weight in gold. We have the experience to understand your complete financial picture and to develop an integrated, ongoing plan to address your needs. We are CERTIFIED FINANCIAL PLANNERsTM who work on a Fee-Only� basis to ensure that your interests come first. So swallow your pride, and watch the benefits accrue as we work together to enable you to achieve your dreams.