If you’ve begun working with a financial advisor, it’s reasonable to wonder whether certain aspects of personal finance aren’t better left up to specialists. And at the top of that list is investment management. After all, can you be sure that someone you’ve hired to develop a long-term financial plan is also going to be equipped to give you the best advice when it comes to selecting investment vehicles?

It’s a fair question, and unfortunately, as with so many good questions in life, the answer is, “maybe.”

The value of specialization

In an ideal world, you’d find an advisor with deep expertise in every aspect of personal finance, from household budgeting to debt management to retirement planning to tax optimization and investment management. Unfortunately, we don’t live in an ideal world, and you may find that there are gaps in your advisor’s expertise.

There’s no reason to think that you need to work with only one advisor. After all, if you had a dent in your car, you’d most likely take it to a body shop, not to your regular mechanic. Comprehensive planners are great, but investment advisory is a specialty, and if you want to be sure you’re getting truly expert advice, then hiring a specialist in investment management is probably a good idea.

Do I need a specialist?

If you’re working with an advisor who is not licensed to give advice on the buying and selling of securities, then you’re on your own when it comes to how to invest your money. That means that if you have to make choices about which securities to invest in, you’re going to need to find a separate advisor who can help you with this aspect of your finances. However, if your advisor holds licenses and designations around investment, you’re probably in perfectly good hands. Always listen to your advisor, however, if they tell you something is outside their wheelhouse. Ask them for a good referral to a specialist.

Does it make a difference?

According to Investment News, people who hired investment advisors saw returns on average 4% higher each year than those who went it alone. That figure includes fees, suggesting that what you pay into an investment advisor relationship more than comes back to you in the form of higher returns.

Who would I look for?

Your search for an investment advisor will largely be driven by two things…how much you can afford to pay, and what other, non-investment, services (if any) you’re seeking. The following can all provide investment advice.


As the name suggests, a robo-advisor is a computer-based service that uses algorithms to provide advice on investments based on the inputs it asks you to provide, including your goals, your timeframe and your tolerance for risk. Robo-advisors are surprisingly effective and are the cheapest form of advisory available. They make a good choice for people who are new to investing, who balk at the higher fees of human advisors, or who already have a good financial planner and just need some basic help investing a modest amount of money.

Hybrid advisors

Sometimes called “online advisors,” these companies use robots for the bulk of their advisory but bring in humans for some of their full-service options such as comprehensive financial planning. To reduce costs, meetings with humans are done by phone or online.

Full-services brokers

An investment broker is someone (or a firm) licensed to execute trades on your behalf. As opposed to a discount broker, who merely executes trades for a fee, a full-services broker also provides advisory services. Not all brokers are bound by a fiduciary duty, meaning that they may not have an ethical and legal obligation to act in your best financial interest.

Registered Investment Advisors

The gold standard for investment advisory, a Registered Investment Advisor (RIA) meets the registration requirements of the Securities and Exchange Commission (SEC) to provide advice on the buying and selling of securities. All RIAs are bound by a fiduciary duty, and most go beyond simply advising on securities, instead providing comprehensive financial planning and retirement planning services.

Will hiring an investment advisor cause a conflict with my other advisors?

If you already have someone helping you with your finances and need to hire outside help on investing, you may be concerned about the etiquette of doing so. Rest easy. Assuming that your existing advisor is not licensed to provide investment advice, it would be highly unusual for them not to expect you to hire a separate advisor for investment management when the need arose. In fact, they will probably advise you to do so.

What questions should I ask when hiring an advisor for investment management?

Here are the main questions you want to be sure to get answered before hiring a specialist for investment management:

  • Are you a fiduciary? In other words, are you duty-bound to make suggestions based on what’s best for me financially, or are you free to suggest securities based on the commission you’ll earn from the trade?
  • What non-investment services, if any, do you offer?
  • What is your fee structure? How transparent is it? Are you fee-only? Fee-based? Commission-based? What is my all-in cost?
  • What licenses, titles and designations do you have? What do they mean? What services do they allow you to offer?
  • Do you or your firm have any disciplinary actions on record? If so, may I see them?
  • How often (and how) will we meet?
  • Do you often work with clients like me? How much experience do you have with clients who match my net worth, career stage, and investment priorities?
  • What is your investment philosophy? Does your approach to investing match my risk appetite and ethical priorities?
  • Who will be the custodian of my investments? Does a third party handle custody, as a safety measure, or does your firm maintain custody of my investments?

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