Should Regular Folks Pay For Investment Advice?


On the surface, it seems like paying for investment advice is a no-brainer. We have no problem paying a doctor, lawyer, or any other expert. Why should investment advice be any different?

There are two arguments against paying for advice. The first is that advice costs too much, and the second is it isn’t very good.

Naysayers like to point at mutual fund salespeople as a perfect example. The salesperson is sucking a fee from the investor for providing very little value. Many will use a customer visit as a sales opportunity, not as an educational session.

Fees have a way of really impacting returns, too. $5,000 per year contributed to a RRSP or TFSA over 40 years turns into $2 million if it grows at 9% a year. If it only returns 7% a year, it turns into $1.14 million. Who couldn’t use an extra $860,000?

There are other solutions, too. Robo-advisors offer professional management at a reasonable price. Or investors can use free resources to build their own simple ETF portfolios. There are dozens of different books, websites, and other resources out there. All you’d have to do is copy their lead.

But becoming a do-it-yourself investor isn’t for the faint of heart. Nobody really knows how they’ll react if their portfolio falls 20% until it happens. A financial advisor can talk you off the ledge, so to speak.

The bottom line? There are pros and cons to both sides of the argument. It’s up to you to make up your own mind.