We’ve all heard of the DIY or Do It Yourself approach. Whether it’s building a new deck or changing the oil in your car, DIY can be rewarding … as long as it’s an activity you enjoy. When it comes to managing your finances, I prefer a DIT or Do It Together approach.
If you’re like most people, you probably want to know where you stand financially. You want to feel confident that you have enough money to support your lifestyle for the long run. Or, if you’re not there yet, you want to know how to get there.
While these end goals are worthwhile, you probably aren’t excited about the details along the way. Over time, your life and financial interests can grow increasingly complicated. You may question the investments and choices you’ve already made, but be unsure about when, how or even if you should make adjustments. This can suck away hours and energy that could be spent on far more rewarding activities.
The concept of DIT Investing makes sense. It’s that sweet spot where you’re an integral participant in managing your money, but you share the burdensome and/or perilous parts with a professional advisor.
As a DIT Investor, instead of flying solo, you partner with a professional advisor who has your back whenever your own time, ability and – let’s face it – patience may fall short. But you also remain fully engaged in your investment experience. You’re not just a rubber stamp to somebody else’s rules:
There’s hard data on the value a DIT relationship can bring you. In 2013, Vanguard® published an analysis of “Advisor Alpha” as a measurement of “the experience and stewardship that the advisor can provide in the relationship.” The analysis concluded: “A financial advisor has a greater probability of adding value, or alpha, through relationship-oriented services, such as providing cogent wealth management and financial planning strategies, discipline, and guidance, rather than by trying to outperform the market.” In follow-up work to its original paper, Vanguard’s analysts found advisors could potentially add as much as 3 percent to investors’ end returns by serving in these and related roles.
So, what are the qualities of a “Do It Together” approach that contribute to an improved investment experience? What are the details that matter? Equally important, which are the ones you can safely ignore, so you can get on with the fun part of living? Beginning with today’s post, I will explore the many ways that DIT Investing can add value to your and your family’s financial future.
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