Investing: Do it yourself or get help?

Produced in association with Newsroom.

Investing has never been more accessible to the masses, with a range of apps offering simple, low-cost ways to put your money behind companies both near and far. 

Alongside DIY platforms is a wealth of online information that can help prospective investors decide what to invest in, as well as how. From learning tools offered by investment clubs or the Financial Markets Authority through to news articles about upcoming IPOs, information is there for those seeking it. 

With all this information now readily available, why do people still turn to financial advisors for help? As Alexandra Dalzell, from Craigs Investment Partners, points out, the integrity of online information as well as its relevance to an individual’s situation isn’t a given. Professional advisors offer personalised advice on strategic investing that goes far beyond stock picking, she says.

Dalzell has been with Craigs Investment Partners since 2006 and in an investment advisory partnership with advisor Jennie Moreton for a majority of those years. 

“I don’t cut my own hair, I don’t do my own tax returns, I don’t legally represent myself. Financial advice is highly regulated on various levels, and particularly within large firms, we also have deep levels of compliance.”

“What we offer is personalised advice,” Moreton says. “You can seek and source your own information, but how does that apply to you and your situation? When we meet with clients, we really take the time to get to know them, their situation, their goals and objectives for their money. 

“Investing isn’t just playing, and I think while investing apps have done a great job of making investing more accessible to many, they’ve also encouraged a sort of ‘gamification’ of investing. But we sit down and we really work with people to understand what their long term goals for their money are and how they want to accumulate wealth in their lives.

DIY investing isn’t a new concept: do-it-yourself share trading platform Invest Direct has been around in various forms for more than 60 years while online share broker ASB Securities last year celebrated 25 years since its launch. 

The appeal of a DIY approach is clear, offering investors control and the ability to pocket capital gains without handing a portion to an advisor. 

Oliver Mander, of the NZ Shareholders’ Association, says DIY investors need two things: the passion and time for the research and maintenance needed to manage a portfolio as well as the capability and knowledge to do so successfully.

“It’s about spending in order to make money. And if you’re a DIY investor that’s no different, it’s about spending your time to actually learn and then to do the assessments that you need to do to make money.”

One of the keys to DIY success is knowing your limits and balancing these limitations with portfolio diversification. Exchange traded funds can help address blind spots in expertise, Mander says, by enabling a broad access to markets in which investors’ knowledge may be lacking. 

“You can’t know everything about every company around the world and even the advisory firms wouldn’t claim to know that either. That’s why they utilise the services of external managers in different markets… where there’s real expertise around those markets.”

Another area of particular difficulty for many investors going it alone is pivoting, either in their approach or in their individual investments, Mander says. People can become wedded to their own ideas and shares – for better or for worse.

“That’s actually a risk for an individual investor, when you become wedded to your own convictions. People are pretty good at buying shares and constructing a portfolio, but people are generally bad sellers.”

Dalzell says having an external party can help investors make “dispassionate” decisions and build a personalised, dynamic strategy based on risk tolerance, goals and timelines. An advisor can also address any limitations holding investors back, whether this be in knowledge or in scope, she says.

Having a professional advisor backed by a big firm on your side can also be a gamechanger in times of volatility. The experts can save investors time and mitigate risk while helping them understand how market movements or geopolitical uncertainty could impact investment choices. For mid-service clients this is in the form of empowerment to take action while for full-service clients, Dalzell and Moreton would take action on their behalf.

“I’m thinking about the current situation because it’s topical with Trump and wars and what’s happening in the world… Trump may have said something overnight and there may be an emotional reaction within the market, we can help our clients understand what that means and how it translates into their portfolios,” Dalzell says. 

Advisors can also help clients plan for times of change: big life events or when moving into a different phase of life such as retirement when portfolio pivots may be necessary. Moreton says with the huge intergenerational transfer of wealth due to occur across New Zealand in coming years, having a helping hand with retirement and estate planning is more beneficial than ever.

“So what we’re focusing on as a firm is, how we can connect with those further generations, those inheriting generations, to ensure that they have knowledge and experience to receive those quite substantial assets.”

Dalzell says the stakes are high when planning your financial approach for different stages of life, meaning it’s worth investing in advice to create a strategy that suits your needs.

“To a point, I think you should do the research, but do the research on the professional advisor you are relying on to provide you financial advice.”

Market Insights enewsletter

Keep up to date with our fortnightly Market Insights enewsletter. Our research team provide timely and regular commentary and analysis on market developments, understanding investment jargon, and the impact of current events.

Subscribe Now