Why DIY Finance Doesn’t Work for High Earners

Many high earners believe that their financial success means they can manage everything on their own. Yet, as wealth and responsibilities grow, the complexity of effective financial planning often exceeds what even the most capable professionals can handle without expert guidance.

Key Takeaways

• Even financially literate individuals can benefit from professional financial planning.

• High-income earners often underestimate the time and complexity involved in managing multiple accounts, taxes, and investments.

• Modern financial tools and behavioral insights make working with a Certified Financial Planner (CFP) more cost-effective than ever.

The Temptation of DIY Finance

Often, I’ve felt I needed professional guidance in one area of my life or another, only to discover that the so-called advisor had less knowledge, education, and experience than I did.

Finding an advisor in any field can be a challenging task. Even when you have a general sense of the type of help you want, you still don’t know what you don’t know.

As a result, you may be overconfident and tempted to handle things independently, such as financial planning, but with today’s technology in a constant state of flux, it might not be worth it to put in the effort required to become and stay proficient on your own.

A Real-World Example

For example, I have a couple of clients who are married and in their late fifties. Both are medical doctors earning substantial incomes, and they’ve accrued and inherited what combined leaves them with a considerable nest egg.

Their investments come from various sources, including inheritance, past employers, savings, and current assets, and they have almost a dozen different accounts. They’re also proactive with their insurance planning, tax planning, estate planning, and trust establishment.

When they first contacted me, they were eager to work with an advisor, and I wasn’t exactly sure why. On the surface, they were well-situated financially and understood all the financial opportunities and risks.

It seemed to me that they could have chosen to take their chances and continue on their own, given their position in the sweet spot of combined assets and income. However, I later discovered why hiring me was a well-thought-out choice on their part.

Going Beyond the Basics: What a Good Advisor Actually Does

Many advisors will ask you for general information about your income, expenses, risk tolerance, and goals. There are, however, those of us who go one step further and ask to see statements and documents for everything and anything that might have a financial impact.

Analytical tools and technology have advanced to the point where these documents can be securely sent online. With our current technology, we can now take a much deeper dive into the implications of all the information and data.

My doctor clients sent me hundreds of pages, each one relevant to their present and future lifestyles and choices. Integrating and analyzing all this data was a full-time job for me.

I have no doubt they could have done this on their own eventually, but the time, effort, and learning curve required made it more than cost-effective to evaluate and find an advisor who could collaborate with them and guide them through this process.

Why Professional Financial Planning Pays Off

Financial planning has evolved far beyond the use of an abacus and handwritten spreadsheets for clients like mine. The modern tools, techniques, and knowledge a financial planner like myself can bring can save you time, energy, and money.

My clients are busy individuals pursuing their career goals and personal endeavors. Choosing to reach out to me to handle their financial planning gives them the comfort and assurance they need to move forward in all aspects of their career and personal lives.

That’s why financially literate or even sophisticated high-income or high-net-worth individuals should seriously consider working with a fee-only Certified Financial Planner (CFP) experienced in personal economics and behavioral finance.

If you’re ready to simplify your finances and gain expert clarity on your wealth, schedule a free consultation to see how professional guidance can make all the difference.

Frequently Asked Questions (FAQs)

1. Why shouldn’t high earners manage their finances on their own?

High earners often have complex financial lives involving multiple accounts, investment vehicles, and tax strategies. The time and expertise required to manage these effectively can outweigh the savings of doing it yourself.

2. What does a fee-only financial planner do?

A fee-only planner provides objective advice without earning commissions from product sales. This ensures their recommendations are aligned with your best interests.

3. Isn’t financial software enough to manage wealth?

While digital tools can help with basic budgeting or investing, they can’t replicate the insight, strategy, or accountability that comes from working with a seasoned financial professional.

4. When should I hire a financial advisor?

Consider hiring one when your financial situation becomes complex, such as managing multiple income streams, large investments, business ownership, or significant tax planning needs.