A classic dilemma for financial consumers involves whether to get professional advice for services such as wealth management. A key reason people are disinclined to obtain such advice is that it costs money, which would then detract from the overall financial returns they are seeking.
Nowadays, it is indeed easy to research investments online and to buy, sell and hold investments online, all without a professional advisor. And yet investors often stumble in this area, the most intelligent people above all.
A successful doctor or engineer may feel like the math involved in calculating price-to-earnings ratios and making comparisons is simpler than the skills they have acquired in their professions, and assume that investing is comparatively easy. What they don’t usually realize is that securities investing is far more ambiguous and unpredictable. A senior asset management executive once recounted at an investment conference how a client of his firm, who was a physician, had made so many ruinous trades that he finally came to the realization that the best investment he ever made was to throw in the towel and hire a financial advisor to manage his portfolio more objectively.
To be absolutely clear, the reason one might prefer a financial advisor in this case is not because the advisor is a superb asset manager but rather because he is a superb manager of clients, preventing them from harming themselves like the aforementioned doctor. In short: it’s very hard to be unemotional about your own finances, and especially about losses.
And so in deciding whether to hire an advisor, one must probe his own level of discipline and emotional self-control. If the stock market produces an average 7% annualized return net of inflation, and one captures 6% because he’s paying 1% a year to an advisor, he’s likely coming out ahead of most investors who, studies routinely show, capture only a small portion of the market return as a result of emotional investing. While 1% is a standard fee, one can find lower fees, including advisors who offer an hourly rate rather than a percentage of assets under management.
Torah thought encourages seeking advice from those who can provide the right kind. Had King Rechavam listened to the advice of his wise men instead of his foolish friends, he would have saved himself ten tribes and the life of a tax collector.
The advisor one seeks, professional or otherwise, must be completely objective. A Talmudic adage warns, “Beware of one who advises you for his own ends.” If you’re paying for advice, make sure that your payment is the advisor’s only source of income. One who is paid by a third party, i.e., by the company whose product he sells, is not an advisor but a salesman whose loyalty may be divided and whose advice may not be objective – the kind of advice the Sages see hinted at in the Torah’s prohibition of placing a stumbling block before the blind.
Having a monetary interest clouds one’s judgment in matters concerning it: “bribes blind the eyes of the wise, and mar the words of the righteous.” The Talmud remarks that a person is unable to see his own liability. Once a person takes a bribe, this incapacity to be objective extends to that party of the dispute as well, and he is unfit to judge that person’s case, just as if it were his own. Beyond the procedural issue of judging a dispute to which one is a party, a person cannot be objective about himself or his benefactors, in judgment as in advice.
When it comes especially to financial matters, people are apt to spin narratives that they come to believe in, whether soundly or unsoundly based. Inaccurate beliefs and analysis can become quite detrimental to one’s financial well-being. Consequently, a person who has this inclination would likely do well to seek professional advice, whereas those of a more detached nature and who are good decision makers could do well without professional advice.
 1 Melachim 12.
 Sanhedrin 76b.
 Rashi, Vayyikra 19:4, from Torat Kohanim.
 Devarim 16:19.
 Ketubbot 105b.