FREE NEWSLETTER
My sister called and asked if she should get a financial advisor.
Her question made me pause, because I’ve wondered the same thing myself.
So, I asked AI — and here’s what came back, along with what I learned as I compared its logic to real life.
How Right Is Right Enough?
AI: You don’t have to be perfect to succeed at investing — just disciplined. If you’ve stayed the course through market downturns and used broad-based index funds, you’ve already solved the hardest part. Markets reward patience more than cleverness.
But be honest: when markets fell 20%, did you feel a strong urge to sell before things got worse? If you truly stayed the course, you may not need an advisor. But if you felt panic rising, that’s a sign you should probably find one before the next downturn.
Me: My sister never looks at her investments, so she’s never tempted to sell. I look more often than I should, but I tend to buy on dips. Between the two of us, we’ve both stayed steady—one by ignoring the noise, the other by leaning into it.
The point goes to self-directed investing for both of us. Sometimes doing nothing—or calmly doing the opposite of the crowd—is the best financial advice of all.
The 1% Question
AI: Most advisors charge around 1% of assets under management. Over 25 years, that fee can reduce your ending balance by about 20%. To earn that back, a good advisor has to add value—often through behavioral coaching, tax planning, and disciplined allocation rather than market timing.
Me: That’s fair. But I’ve seen plenty of people pay for advice they never followed, and others who followed advice they didn’t understand. My sister rarely changes anything; an advisor wouldn’t move her needle. For someone who panics easily, though, that steady voice might be worth the cost.
For my sister and me, the point goes to self-directed investing.
The Harder Choice
AI: Picking a good advisor is harder than picking good investments. You can buy an index fund in seconds, but finding a fiduciary who truly serves without selling takes discernment.
Two advisors might charge the same fee but deliver very different results—one just rebalances, another integrates taxes, estate planning, and charitable giving.
And the numbers don’t make it easier. There are roughly 300,000 to 400,000 financial advisors in the U.S., not all fiduciaries, and more than 10,000 mutual funds and ETFs to choose from. With that much noise, even smart investors can freeze up.
Me: I’ve met both kinds of advisors—the product pusher and the true planner. The second is rare. With hundreds of thousands of advisors and thousands of investments, confusion is almost guaranteed.
For me, the point goes to self-directed investing. At least I know who to blame for my mistakes—and who’s not charging me 1% to make them. Maybe more so for my sister. She could be an easy mark for the unscrupulous.
AI as a Thinking Partner
AI: Artificial intelligence can help explore portfolio ideas — not to make decisions, but to show reasonable, diversified, low-cost examples. No predictions, no sales pitch. Just plug in your age, risk tolerance, and goals, and it can outline a portfolio that fits your situation.
Me: That’s about what any good advisor would recommend. The difference is, AI doesn’t charge 1%. Of course, it also won’t talk you out of panic-selling, celebrate your first year of retirement, or help you sort through emotions when markets tumble.
For me, the point goes to AI — for the math and objectivity. But for my sister, if we could find the right advisor, the point might go to the human. When it comes to reassurance and accountability, algorithms still can’t match empathy.
When You Might Still Want an Advisor
AI: Even disciplined investors may benefit from advice when taxes, withdrawals, or estate plans get complex—or when a spouse might need help managing later.
Me: I manage our investments, but my wife is fully able to jump in if I weren’t around. However an advisor may be helpful.
The point is split — not for performance, but for continuity and peace of mind. For my sister, it’s not as clear. Her estate will simply go to her daughter.
The Bottom Line
AI: If you’ve stayed invested through market storms, used simple index funds, and kept costs low, you may already be doing what most professionals recommend. But if your life gets more complex, or you want help for your family later, a good fee-only fiduciary can be worth it.
Me: Agreed. It is a very difficult decision. It is likely that my sister doesn’t need one, and for now, neither do I. But that could change. The real lesson is that good advice—human or otherwise—depends less on intelligence and more on temperament.
Some people need guidance; others need guardrails.
Either way, the goal is the same: to stay steady, stay humble, and stay invested.
Final score: a draw between AI, advisors, and the patient investor.
The other day I listened to a podcast that claimed Swiss banks don’t recruit financial advisers from people with exceptional financial planning credentials, they recruit people with exceptional hospitality backgrounds because so much of the job is making clients feel at ease.
Then they asked their guest, a CFP, how much of the job was helping people feel good about money, and the reply was (paraphrasing), “80%. It’s largely psychology.”
Excellent article that should help many. I read books, took a night class on finances and all paid off. So far no advisor needed. It takes a bit of work, but if you advise yourself and beat or tie the S&P 500 you know you are doing well. Also you will save probably $100,000 and more over a 50 year stock life. I once tried Fidelity to handle $50,000 and they made trades every day. That went on for a couple months, and the returns were not stellar or less, so never again any advisors. However if not confident, then work hard to find someone that wants to help you, and not the advisor.
Someone once said they wouldn’t join a club that would let them be a member. I feel the same way about advisors and wealth managers for people who have less than 10 million invested. At some point the portfolio gets big enough that it’s quite reasonable to hire someone to manage it–under your supervision, because it would be foolish not to supervise such a manager.
I cringe every time I hear the term “smartvestor pro.”