Emily’s Investing Story, Part 2: You are Your Most Important Advisor

Everyone gets financial advice somewhere. Families, friends, news, and paid advisors all want to tell you what you should do with your money. At some point, you have to figure out which investments are right for you. You have to be your most important advisor.

Taking Stock

My grandfather was once given a piece of advice: Don’t invest in life insurance, invest in a life insurance company. It’s a piece of advice he followed, and was able to amass a pretty large holding in Jefferson Pilot. He died, and left it to my grandmother. As she got older, it was distributed to her 5 children, and some of it went to grandchildren.

When the stock was transferred to me, I was given strict instructions. I was to leave the money in the dividend reinvestment plan and not to touch it. For a decade and a half, that’s what I did. I knew how lucky I had been to be given this gift, and protecting it was a high priority. My mother reinforced this strategy strongly and vocally. The stock stayed in the dividend reinvestment plan when I moved to another city, when I struggled to pay down debt, and when I bought my first house. It grew, and did well. And then, in 2005, Jefferson Pilot was acquired by Lincoln National.

By 2005, I had other investments, but probably 90% of my holdings were in Jefferson Pilot. I trusted Jefferson Pilot. JP had solid fundamentals and a good investor track record. I didn’t have the same level of comfort with Lincoln National. I talked to my mom, who released me from her restrictions with a “Gosh, I sold most of mine a while ago.”

And then I went and talked to my financial advisor.

Getting Advice

At that point, I was working with Chris, my third financial advisor. I don’t remember exactly how I got introduced to him, but we seemed to have developed a better relationship than I had with my first advisor. After over a decade of looking at investments, I felt a lot more confident about my abilities and ideas.

We agreed I would leave a healthy chunk in Lincoln National (which, I will say, has done very well over the last decade), but would look to diversify my assets.

Then Chris gave me his recommendations: almost everything remaining after the agreed stock sales would go into a diversified mutual fund portfolio. Immediately, I had some creeping misgivings, but I couldn’t explain why. So I delayed making a final decision on what to do with the money, and tried to think why I didn’t want to go with Chris’s recommendations.

It finally hit me. Chris wanted me to go with a portfolio that was 90% individual stock, and 10% mutual funds, to one that was closer to 90% mutual funds and 10% individual stocks. At this point I had almost 10 years with mutual funds, and had seen how they had done (or not done). My JP stock had been through stock splits and dividend reinvestment, and had grown handsomely. The two mutual funds I had been investing with, not so much.

Making a Decision

I called Chris and told him to give me some possibilities that weren’t so mutual fund heavy. I would diversify, but I would also continue to invest in dividend-paying individual stocks as well as mutual funds.

I realized that I had already developed an investment philosophy, and I wanted to keep following it.

At that point, I still wasn’t the best at seeing the reason that the performance in my mutual funds was making me hesitate. It was only much later that I learned to look at the fee schedules in addition to the asset mix and the historical performance. And I’m still not sure that I love some of the stock picks he gave as an alternative. (Except Altria. I love MO, and its continuously rising dividend). But Chris did give me alternatives that fit me far better, and all because I knew that the first investment plan he gave me, while “safe” and “diversified” and “age-appropriate”, was not the right plan for me.

I knew the investments that were wrong for me, and I listened to myself. Learning the lesson that I was my most important advisor was a big step in my investing journey.

How to Be Your Most Important Advisor

In the intervening years, I’ve worked with two more financial advisors. I understand now that their job is to advise, and mine is to make the decisions about my money. To make good decisions while working with an advisor, I make sure I follow these rules.

  • Listen to your advisor’s advice, even if you don’t follow it. You’ll learn more, and the conversation may bring you to other important realizations.
  • Ask a lot of questions. Your advisor may not understand all of your concerns, and your questions can help guide them and you to better decisions.
  • Don’t feel pressured to make a decision right away. Take time to think about things and to do your own research. If your advisor’s recommendations don’t feel right to you, they probably aren’t right for you.
  • Talk about your investments with another person, particularly if you have reservations. It was only by bouncing Chris’s initial ideas off of several friends that I realized that I had an investment philosophy already that I had not articulated before.
  • It’s okay to revisit old ideas. On at least 3 occasions, I’ve declined to follow my advisor’s recommendation on a stock purchase initially and come back to it months later. That’s probably because I paid more attention to the company in the intervening months.

Remember, no one cares for your money as much as you do.

You can learn a lot working with a financial advisor, and you can have a good experience. Just keep in mind that you need to be your own most important advisor.

Do you work with a financial advisor? What have you found to be your rules for choosing who you get advice from and how you follow that advice?

This article is for information purposes only. I am not a financial advisor, although I advise myself.  Past performance does not determine future performance, and an investor should proceed with caution and do lots of research before putting their money in any investment.

This article was originally published 8/17/15 and revised 8/17/16.

Emily’s Investing Story, Part 2: You are Your Most Important Advisor

Fun Money Mom


12 thoughts on “Emily’s Investing Story, Part 2: You are Your Most Important Advisor

  1. I hope people learn from your experience. You questioned, adjusted, made decisions, paid attention, investigated – not all in that order. You spoke the truth – no one cares more about your money than you do. And if an advisor won’t answer your questions or challenges who’s in control of your money, run.

    We’re still mulling over whether we want to pursue a meeting with a planner. We’re not looking for investing advice, only tax advice. We might be better off with a good CPA (and when we move to your area I may ask if you have any suggestions).

    Great details as usual, Emily.
    Mrs Groovy recently posted…The Laser-Focus Positivity ChallengeMy Profile

    • I think going to a CPA is probably a better choice for you guys. They are much more likely to stick with their advise role rather than trying to sell you something. But you might also try the State Employee’s Credit Union if you are a member. They have a lot of member services including retirement planning and consulting.

      If an advisor won’t answer questions or doesn’t ask you any, you definitely want to find a new advisor.

  2. I see so many financially-savvy people arguing on the internet over whether or not you should use a financial advisor. But much more important is your lesson on *how* to use a financial advisor, and how to be your own financial advisor. Listening, asking questions, and talking to others are good ways to improve your investing skills while blindly following one person’s advice is a good way to go broke.
    Gary @ Super Saving Tips recently posted…Lunchtime is Saving Money Time on School LunchesMy Profile

    • I get the dilemma. It’s a lot easier to invest without an advisor than it used to be, and so many people have been won over by index fund strategies that they don’t see that the worth of working with an advisor is worth the extra cost. Particularly since some advisors push high-cost mutual funds or make poor recommendations. (My dad’s old advisor got him to buy both Worldcom and Enron at peak prices…he’s extremely suspicious of any advisor.)

      I have gone periods where I didn’t have an advisor (though Jon used to be one and so I get lots of advice anyway.) I currently work with the one that helped my mom and helped me navigate mom’s estate. He’s been very good, even when we don’t agree on a strategy or allocation. I do think I learn a lot from him and that he’s worth his fees. When he retires, though, everything will get rolled into the Vanguard account and I’m not sure I’ll feel the need to bring in another advisor.

  3. Great insight Emily. I worked with an advisor recently when I rolled my 401k over. You offer sound advice, listen to their advice, but that doesn’t mean you always have to act on it. Follow your gut. If you don’t feel you know enough about what the advisor is talking about do some homework, talk to others, never just blindly follow.
    Brian @ debt discipline recently posted…Three Years of BloggingMy Profile

    • Thanks Brian. I think one of the best things I learned in the whole process was to slow it down. There’s seldom a publicly traded investment opportunity that won’t wait until later, and that gives you times to make your choices and do your due diligence.

      Rollovers and setting up an inherited IRA are both situations where getting a little advice to navigate the process makes sense. Do it wrong and you can end up with a situation (and a tax bill) you don’t want.

  4. All great tips, Emily! Thanks for sharing your story. It’s so important to ask questions, take your time, educate yourself and talk to others to make a decision that is right for you.

    My husband and I got burned years ago when we went to a financial planner and have been doing our own investing ever since. Thankfully we did our research, took our time to think about it and talked to others before going along with the plan they wanted us to use (in short, they wanted us to buy a huge universal life policy as a college and retirement savings vehicle, complete with high commissions for them-ugh). We’ve done alright on our own and have educated ourselves so we are making decisions we feel are right for us (thanks jlcollinsnh!). If I were ever to seek out advice again, I would interview several advisors prior to speaking about a plan (or just go to a CPA for tax advice).
    Amanda @ centsiblyrich recently posted…How much does camping cost? Our weeklong camping vacation costs and comparisonsMy Profile

    • Nothing like a bad advisor to put you off of them forever. As I mentioned to Gary, my dad has had some seriously bad experiences.
      I do think interviewing several is a good idea, as is just going to a CPA for tax advice. It’s really important that you mesh with the person you are trusting to help you manage your money, but I do think you need to think of it in those terms. Advisors advise. They are there to help you manage your money, not to manage it for you.

  5. We don’t work with a financial advisor now – but I did for WAY too many years. And an expensive one at that. If I was going to work with one now, I’d choose a fee only advisor. Your recommendations are really excellent – you don’t have to make decisions right away at all. And I agree about checking with others. Don’t necessarily do what they do, but use all the information you gather to help make a decision.
    Vicki@Make Smarter Decisions recently posted…5 Questions Before My Tech Support Heads Back To CollegeMy Profile

    • It does seem like most of the personal finance bloggers seem to be saying “You probably don’t need an advisor most of the time, but if you use one, use a fee only advisor.” And that makes sense, because many of them promote index fund strategies, which are pretty easy and don’t require much advice. You can use a fee-only advisor a few times to check over your plan or help you navigate some tricky paperwork, and their role as advice givers is much clearer.

      My current advisor does get a commission, but I know what his fees are. He doesn’t work cheaply, but I do trust that I can work with his advice. I think as long as you do your due diligence and know what you’re paying, you shouldn’t rule out the possibility of a good commissioned advisor. Finding a good one may not be so easy. My current one, though, worked with my mom and was very successful at helping her build a good portfolio over a 20 year period. so I have a long track record to judge his performance by.

    • It does make decisions easier. My approach (dividend reinvestment of big name stocks) isn’t going to be everyone’s strategy, but it’s worked well for me.

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