Do I Need a Financial Advisor If I Manage My Own Investments?

I have worked with plenty of people who manage their own investments and do a very good job of it. They understand diversification, keep their costs low, rebalance their portfolios, and avoid chasing whatever investment happens to be performing well at the time. Some have been investing on their own for decades.

But as retirement approaches, the questions often change. Instead of asking what to invest in, they start asking when they can retire, how much they can afford to spend, when to take CPP and OAS, and how to draw down their savings without paying more tax than necessary.

Investing Is Only One Part of a Financial Plan

There is a tendency to use the terms financial advisor, investment advisor, and financial planner interchangeably. But managing investments and preparing a financial plan are not the same thing.

An investor might be comfortable deciding how much of their portfolio to hold in stocks and bonds but less confident deciding whether to take CPP at 60 or 70. They might know how to rebalance an ETF portfolio but not whether they should withdraw money from an RRSP before age 71.

In my experience, DIY investors often spend considerable time researching investments and trying to minimize fees. Yet decisions about taxes and pensions can sometimes have a greater financial impact than choosing between two similar ETFs.

You can read more about this distinction in What Is Advice-Only Financial Planning and Is It Right for You?

Consider a DIY Investor Approaching Retirement

Consider a 62-year-old investor who has managed their own portfolio for most of their adult life. They have $900,000 in an RRSP, $150,000 in a TFSA, and $350,000 in a non-registered account. Their mortgage is paid off and their plan is to retire at 64.

They may have no interest in hiring someone to manage their $1.4 million portfolio. But they still need to determine whether retiring at 64 is realistic, how much they can afford to spend, and how to structure their retirement income.

Should they start CPP at 65 or delay it until 70? Could withdrawing from their RRSP before age 71 reduce their lifetime tax bill? And how much could they afford to spend if they lived to 95 or investment returns were lower than expected?

These decisions can be evaluated through detailed retirement planning without the investor giving up control of their portfolio. 

Where DIY Investors May Benefit From Professional Advice

The DIY investors who approach us are rarely looking for someone to tell them which ETF to buy. They are more likely to be asking whether they can retire at 62 instead of 65, or how much they can afford to help their children financially.

Tax planning is particularly important as retirement approaches. For example, someone with a large RRSP may assume they should leave the money untouched until age 71 to maximize tax deferred growth. But deliberately taking withdrawals in their 60s could sometimes reduce their lifetime tax bill, depending on their other income and the timing of their government benefits.

The same applies to CPP. Delaying benefits can substantially increase monthly payments, particularly for someone expecting a long retirement. But the best starting age depends on factors such as life expectancy, retirement spending needs, tax considerations, and other sources of income.

A good retirement plan should compare alternatives rather than simply assuming everyone should start CPP at 65 or leave their RRSP untouched until they turn 71.

Business owners may face additional decisions about withdrawing money from their corporations. Corporate investments create another layer of tax and withdrawal decisions.

Looking at these decisions in isolation can be misleading. A withdrawal strategy that minimizes tax this year may not minimize tax over the next 25 years. 

Can a Financial Planner Advise Me About My Investments?

At Objective Financial Partners, we consider investments as part of a broader financial plan. We can discuss risk tolerance, asset allocation, expected returns, and how investment risk and asset allocation affect someone's retirement and financial projections.

We cannot recommend which individual stocks, bonds, ETFs, or other securities you should buy or sell. Nor do we manage investment portfolios.

Many experienced DIY investors are comfortable selecting investments themselves but want an independent assessment of whether their retirement plan is realistic and sustainable.

If you want specific investment recommendations or ongoing portfolio management, you would need an appropriately registered investment professional.

Sometimes the Conclusion is That You Do Not Need to Change Anything

One benefit of paying separately for financial planning is that sometimes the conclusion is that you do not need to change anything. Our team has worked with DIY investors whose financial plans confirmed they were saving enough and were on track for retirement. There may still have been opportunities to improve their tax planning or retirement income strategy, but their investments did not necessarily need to change.

Financial planning should not be about finding problems simply to justify the planning fee. Sometimes the value is confirming that no major changes are needed.

Not every DIY investor needs a financial planner, either. If your financial situation is straightforward and you have the knowledge to prepare your own financial projections, you may be perfectly capable of doing everything yourself.

You May Only Need Help With One Question

Hiring a financial planner does not necessarily mean paying for a comprehensive financial plan. You may have done most of your own retirement planning but want help comparing CPP starting ages or getting a second opinion about a pension decision.

In those situations, a focused Pay-As-You-Go consultation may be sufficient. More complicated situations may warrant detailed retirement projections, particularly when several types of accounts, pensions, corporate assets, rental real estate, or cross-border considerations are involved.

The amount of advice you buy should reflect the amount of advice you need.

You can learn more about the different fee arrangements in How Much Does a Financial Planner Cost in Canada?

What if I Eventually Want Someone Else to Manage My Investments?

DIY investing does not need to be a lifetime commitment. Some investors who enjoyed managing their portfolios while working lose interest as they get older. Others become uncomfortable managing a larger portfolio after an inheritance, business sale, or pension payout.

There are practical considerations as well. Someone who has managed the family's investments for decades may be concerned about whether their spouse could take over if they died or became incapable of managing the accounts.

Professional investment management may make sense in those circumstances, and there is no requirement to get investment management and financial planning from the same firm.

Our clients who want professional investment management can choose their own investment professional. Many have great existing relationships. If requested, we can introduce them to portfolio managers we know and trust. We do not receive commissions, referral fees, or other compensation from those managers.

For more on this approach, read Can I Keep My Investment Advisor and Work With a Financial Planner?

Is Advice-Only Financial Planning Worth the Cost for a DIY Investor?

The value of financial planning depends less on your net worth than on the decisions you are facing. Comparing CPP starting ages, pension options, RRSP withdrawal strategies, or corporate withdrawals can warrant detailed analysis. Others may only need a second opinion on a specific decision. We also have clients who work with us on an ongoing basis so that they have someone to consult as their circumstances change.

It is also worth understanding what you are paying for. A financial planning fee is not the same as an investment management fee. You can compare the two in Flat-Fee Financial Planning vs. a 1% Investment Management Fee.

For DIY investors, the relevant question is not necessarily whether paying for financial planning will improve investment returns. It is whether the advice will help them make better financial decisions, potentially saving tax or avoiding an expensive mistake.

Being a DIY Investor Does Not Mean Doing Everything Yourself

Many of the DIY investors we work with enjoy managing their own portfolios. What they are less confident about is making retirement, tax, and estate decisions that could affect them for decades.

If you are comfortable selecting investments but want another opinion on retirement funding and estate strategy, you do not need to hand over your portfolio to get that advice.

At Objective Financial Partners, we provide advice-only financial planning without requiring clients to transfer their investments. You can book a complimentary introductory call to discuss whether a focused consultation or more comprehensive planning engagement makes sense for your situation.