DIY investing is sold on price, but other aspects of professional financial planning should not be overlooked.
Consumer research has revealed pricing is considered the most important factor by self-investors, says research firm Platforum.
The firm’s Jeremy Fawcett said: “We know from our consumer research that competitive price is now the top consideration among investors when choosing a platform service and that twice the number of people prefer fixed price compared to percentage based charging model.”
But buying financial services based on how much they cost rarely delivers the outcome a consumer expects.
The accepted way to buy is to compare a wish list of features and benefits of several services or products without looking at the price.
Then, compare the price of the short-list of suitable options to arrive at the one best suited for the consumer.
For all the benefits of direct access, cheaper transaction and control a trading platform can give a DIY investor, they lack the professional edge of working with a wealth manager.
Platforms shirk the responsibility of offering investment advice.
Shirking responsibility for good advice
DIY investing means relying on your own research, experience and skills in picking a balanced portfolio. Few investors with a life have the time or resources to complete such a vast undertaking.
Then come the complications that are easily overlooked that can ruin carefully laid financial plans.
Residence and domicile are easy to get wrong, but the first factors a professional adviser will consider.
Once these are confirmed, a tax and financial pathway unfurls like a carpet.
Expats with investments in more than one country are vulnerable to cross border tax errors that can be costly to correct.
No single DIY investor can expect to master the arts of investing, international tax, estate planning, residence and domicile.
Paying for experience
Even financial firms have a team of experts standing by to deal with cases like these.
Another plus for a professional wealth manager is the firm or network they work for is likely to have huge sums of money under investment management, which gives them access to special deals and discounts from big international financial brands for their customers.
Working with a wealth manager will cost more than DIY investing, but the decision should not be made on price but value for money.
Wealth managers will add layers of value and offer a regulated advice service, which means they must explain the reasons for their recommendations and make sure they comply with the financial rules of the country where an expat lives.
Trading platforms may seem cost-effective, but they bear no responsibility for investment mistakes and pass all the risk to a DIY investor.