By Mark Stone, financial planning director at Whitechurch Financial Consultants.
The British love affair with DIY can be a mercurial relationship with euphoric highs and frustrating lows. When it comes to home improvement my efforts are more akin to an episode of Some Mothers Do ‘Ave ‘Em than that of Changing Rooms. I quickly learned that employing a professional not only reduced time and effort, but after the dust settled (literally), it proved more cost effective and I ended up with a much better end product. 
Given the importance financial planning can have on future standards of living, it surprises me how many people rely on their DIY skills when it comes to investment strategies. There are understandable reasons for this of course, but also some misconceptions on the likelihood that a DIY portfolio will provide a better end result.
No Free Lunch
Minimising costs is understandably a key motivator. But the idea that DIY investing is free is a misconception. As well as underlying fund charges and dealing charges, the DIY investor will pay a platform fee for holding their investments. In many cases these fees are no less (and sometimes more) than if using a professional wealth manager.
A Measured Approach
The key to a successful investment strategy is not about speculating on the next get-rich-quick scheme. It is about taking a long-term measured approach of what is right for you. Working with an adviser will help you receive an investment solution designed to meet your personal goals, work within your timeframe and most importantly work within your appetite for risk.
The Stress Factor
The longer people invest the higher the stakes become; both in accumulating greater wealth and in nearing the time when you come to rely upon your investments. What was once a thrilling hobby can easily become a burden of increasing responsibility. In many situations outsourcing responsibility can provide peace of mind. For many, time can be spent more productively and enjoyably than constantly administering and monitoring investment portfolios.
Avoiding Emotional Attachments
Managing your own investment portfolio provides many pitfalls of investment psychology that are hard to avoid. Following the herd is a common error. It feels comfortable to follow consensus, but in fact this can be highly dangerous. Having a clearly defined investment approach and working within risk/reward parameters allows investment managers to operate with clear-headed objectivity. Avoiding emotional biases is key within a professional investment process.
Over the long term, DIY investing could actually be more costly to accumulating wealth. So although wealth services are not free, (you may be surprised how little they cost) as in many walks of life the cheapest solution is not always best!
Mark Stone is the financial planning director at Whitechurch Financial Consultants – a firm of chartered financial planners, established in 1982 and headquartered in Bristol. Comprehensive wealth management services are delivered by the team of experienced highly qualified advisers. They also work closely with the award-winning Whitechurch Investment Management team to create investment portfolios for private clients.
Find out more at www.whitechurchfc.co.uk
