Often, people turn to “financial advisers”, which is a blanket term for a number of different professions, including Certified Public Accountants (CPAs) who focus on taxes and auditing, investment advisers who focus on investing and wealth management, and financial planners who take a holistic approach to your finances. What’s important is fiduciary duty, which is defined as the obligation of the agent (the professional) to act in the best interest of the principal (you). Make sure any professional you work with has some sort of fiduciary duty (Michael Kitces CFP discusses the different kinds of fiduciary duty on his website, but all versions are good). When deciding whether to speak to a financial professional, think about the following questions:
- Can you afford it? Financial professionals can often charge hourly or retainer fees, on top of the costs of any financial products they put you in.
- Do you have enough money? Some professionals, especially Registered Investment Advisers (RIAs), will only work with clients who have enough money for them to manage.
- What are you hoping to get out of a financial adviser? Do you really need a full plan, or do you just need some tools?
We do think that financial counseling can be truly helpful – but we don’t think that everyone needs a high-cost, in-person advisor to help them navigate their finances. Often it’s simply because people don’t have pressing enough needs (or enough money) that they need a specialized solution. That’s where robo advisers come in. Robo advisors like OpenInvest don’t replace the full breadth of services offered by financial planners, but as RIAs they manage your money for you. All RIAs have an SEC-regulated fiduciary duty to invest in their clients’ best interest, and they’re fee-only, meaning that you only get charged one, flat fee of for your investments (though many robo advisors often include hidden ETF fees). One thing human advisers sometimes offer that you can’t get with a robo advisor is the ability to customize your investments. In the past, wealthier individuals have been able to work with advisery firms to align their investments to their values, but that has rarely been available to the average investor. Fortunately, OpenInvest offers a low-cost, flat-rate, totally customizable socially responsible investing option, allowing any investor to manage their money without sacrificing their values.