1. Doing it all on your own:
You conduct the analysis, make decisions as to the
correct asset allocation, determine which
investments to buy, implement the buys and sells,
monitor the portfolio and rebalance the portfolio
based on a prudent repeatable process that is tax
efficient.
2. Seek counsel from an Advisor that provides you
with recommendations; either paid on an hourly
basis or as part of a financial plan (and who does not
sell a product).
The Advisor provides advice as to allocation and
specific investments, but you implement the
recommended changes to the allocation and specific
investments. It is up to you to return for future
advice. The Advisor does not monitor or proactively
call you when a change occurs. The advice does not
include the payment of commissions.
3. Advisor and you “co-manage” your investments on
an ongoing basis.
The Advisor does the analysis, provides
recommendations, and does the investment
implementation except in the case(s) of employer
retirement accounts wherein you implement specific
changes. The Advisor monitors the investments and
your asset allocation, reports to you periodically as to
the performance of your portfolio, pro-actively
contacts you if a problem arises, discusses suggested
tax efficient re-balances as needed, updates your
Investment Policy Statement and changes your asset
allocation as your plan changes. The advice does not
include the payment of commissions.
4. You turn your investment decisions over to a
money manager.
The Manager invests the money according to a pre-
determined plan, monitors the portfolio and
investments and makes changes as needed. You are
an observer to the process and the results.
5. Advice from a salesperson that earns a
commission when you are sold a product.
This “non-fiduciary” advice is subject to conflict of
interest between what is best for the financial
services company and sales person versus what is
best for you as the investor. Another issue is that if
later you want to change investments, another
commission can be charged. This type of approach
generally occurs at Edward Jones , Merrill Lynch,
Morgan Stanley , and other Broker Dealers.
Which Investing Option is best for me?