DIY or Hire a Financial Advisor?

I don’t prepare my own taxes.

I’m not incapable of learning. I’ve done the math on a 1040. I understand depreciation schedules and capital gains treatment. But I use an accountant because the cost of getting it wrong is high, and my time is worth more spent elsewhere. That trade-off makes sense to me, and I’ve never second-guessed it.

I also don’t represent myself when I need legal advice. I don’t rewire my own house. I don’t pull my own teeth.

So I’ve always found it curious that people draw the line at investment management — that this one discipline, of all the disciplines in a person’s financial life, is the one they’re most confident they can handle on their own.

Recently, I’ve seen a lot of content online encouraging people to skip the financial advisor entirely. The message is appealing: advisors are expensive, their fees compound against you, and with a little education and the right brokerage account, you can do just as well yourself. Maybe better.

I’m not here to tell you that’s wrong. For some people, it isn’t. But I think the question deserves a more honest look than it usually gets.

The Competence Question

Here’s the question I’d encourage you to sit with: How many things that you’ve spent no serious time learning do you actually do well?

Not adequately. Not good enough. Actually well.

Investment management is a profession. People make careers out of it — studying businesses, reading financial statements, tracking economic conditions, and building the judgment to act correctly when the data is unclear and the temptation to do something (or nothing) is strong. That judgment doesn’t come from a weekend course or a social media video. It doesn’t come from a few years of riding a bull market. It comes from doing the work, repeatedly, across different market conditions, and learning from the mistakes along the way.

That’s not a knock on anyone who wants to learn. Learning about investing is genuinely worthwhile. But there’s a difference between being financially literate and being a professional investment manager. Just as there’s a difference between understanding how your car’s engine works and being able to rebuild one.

What a Professional Actually Does

Here’s what often gets left out of the “skip the advisor” conversation: what a professional investment manager is actually doing with your money.

At Muhlenkamp & Company, we’re evaluating businesses. Not just watching ticker symbols or reacting to headlines — actually studying the profitability, financial strength, and value of the companies we own. We’re asking whether a business earns a good return on the money it has invested, and whether we’re paying a reasonable price for it. That work happens continuously, across dozens of companies, in the context of the broader economy.

We’re also watching for changes — in a company’s fundamentals, in the interest rate environment, in the competitive landscape — that might mean it’s time to buy more, hold steady, or sell. And when markets drop sharply, we’re doing the work to determine whether those drops reflect real changes in business value, or whether they’re short-term noise that will resolve itself. That distinction matters enormously for long-term results.

None of that is mysterious. But all of it takes time, discipline, and a process built around asking the right questions consistently.

The Emotional Problem

There’s another piece of this that doesn’t show up in fee comparisons: the emotional difficulty of investing through hard markets.

My father, Ron Muhlenkamp, has written about this going back decades. In his words, the problems with investing in stocks are almost entirely in the short run — when prices are being driven by fear and hope rather than business value. Those swings are real, and they feel very significant when you’re living through them. The investors who do well long-term are not necessarily the ones with the most information. They’re the ones who can hold a well-reasoned position calmly when the market is telling them they’re wrong.

Most people, understandably, cannot do that — especially when it’s their own retirement savings on the line. I’ve watched smart, capable people make costly decisions in down markets simply because they were scared, and there was no process or perspective to anchor them. A good advisor provides that anchor. Not because they know things you don’t, but because they’re not emotionally attached to your portfolio the way you are. They can stay steady when you can’t.

When DIY Actually Makes Sense

I’ll say something that might surprise you: I think there are situations where self-directed investing is entirely reasonable.

If your financial life is relatively simple — a 401(k) with a handful of good index funds, a long time horizon, and the genuine temperament to leave it alone when markets get rough — then you may not need a professional investment manager. The discipline to save consistently and avoid costly mistakes matters more at that stage than sophisticated portfolio construction.

Similarly, if you’re in the early stages of building financial habits — learning to budget, pay down debt, and save before you invest — the most important work you can do has nothing to do with stock selection. Getting those foundations right is valuable, and there are good resources for that.

What concerns me is when people skip the advisor not because their situation is simple, but because the idea of not needing one is appealing — because the fee feels like an easy cost to eliminate, or because a course or app has made them confident in a way that experience hasn’t yet tested.

The Fee Question

Let me address the fee argument directly, because it comes up constantly.

Yes, investment management fees are real, and they compound over time. A 1% annual fee is not trivial — it adds up. That math is accurate.

But the relevant question isn’t whether you’re paying a fee. It’s what you’re getting for it, and how your net result compares to the alternative. A good investment manager who helps you avoid one major mistake — the kind that takes years to recover from — has likely more than covered their fee many times over. A mediocre one who simply holds a reasonable allocation through volatile markets may still be providing value if the alternative is a client who would have sold in a panic at the bottom.

And a bad one? Yes, you should fire a bad one. Not all advisors are equal, and the relationship should be evaluated honestly. But the choice isn’t between “pay a fee” and “keep all that money.” The choice is between paying for professional management and doing the work yourself. Both have real costs.

What to Look For

If you’re evaluating whether to work with an investment manager — or whether to continue with your current one — here are the questions I’d encourage you to ask:

1. Does the firm have a clear, coherent investment philosophy? Can they explain what they own and why, in plain language? Not jargon — plain language.
2. Do they publish their results over time, not just in good years? Track records matter. Anyone can look good in a sustained bull market.
3. Do they understand your full financial picture — not just your portfolio allocation, but your income, your time horizon, your other assets, and how many down years you could handle without changing your behavior? A good advisor isn’t just managing a portfolio. They’re helping you stay on a plan.

And can they tell you, honestly, when their services are and aren’t the right fit for your situation?

The Simple Answer

So — do you actually need a financial advisor?

It depends on you.

It depends on the complexity of your situation, the size of your portfolio, your time horizon, and — most importantly — your genuine ability to manage your own investments with discipline and without emotion through difficult markets. That last part is the one most people overestimate.

If you have the knowledge, the time, and the temperament to do this well, you may not need to pay for professional management. I mean that sincerely.

But if you’re considering skipping an advisor primarily because someone on the internet made it sound easy, I’d encourage you to think harder about the question. Ask yourself whether you’d apply that same logic to the other professionals in your life — your accountant, your doctor, your attorney. Ask whether the skills required for this work are ones you’ve actually developed, or ones you’re assuming you could pick up.

Investing isn’t complicated in theory. In practice, it asks a lot of the person doing it: patience, discipline, intellectual honesty about what you know and don’t know, and the ability to stay calm when staying calm is the hardest thing to do.

Those qualities can be developed. But they take time. And in the meantime, the market doesn’t grade on effort.

 

The opinions expressed are those of Anthony Muhlenkamp and are not intended to forecast future events, guarantee future results, or offer investment advice.