DIY Investing vs. A Financial Planner: What Each Really Costs You Over 25 Years Are you wondering whether to hire a financial planner or DIY invest on your own? I hear this question all the time, and it’s personal for me right now, which I’ll explain below. Start with the number that gets everyone’s attention: a 1% fee. The average financial advisor charges approximately one percent of assets under management. It sounds like nothing. But on a $500,000 portfolio, that’s $5,000 a year, and over 25 years it can cost you more than half a million dollars. And that’s assuming that your portfolio value remains constant! This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. Does that mean you should never hire a financial planner? Not exactly. Let’s break down who should DIY, who should hire help, and the middle option that most people overlook. The Math: What a 1% Fee Really Costs Say you invest $500,000 and earn 7% a year for 25 years. With no advisory fee, you end up with about $2.7 million. With a 1% fee, your return drops to about 6%, and you end up with about $2.1 million. Same portfolio, same market. Roughly half a million dollars or more goes to fees. The Case for DIY Investing Self-directed, or DIY investing has a lot going for it. Lower cost. A simple portfolio of low-cost index funds or ETFs can cost a fraction of a percent per year. A basic U.S. stock market index fund like Vanguard Morningstar Total Stock Market ETF (VTI) has an expense ratio of 0.03%, while an international stock ETF like Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) charges the same low rate. On a $100,000 investment, the annual expense ratio of 0.03% equals $30. No additional fees apply! Full control. You decide what you own and when you change it. With a modicum of financial and investment education, you can learn how to to invest, and decide which investments fit your goals. Simplicity. A basic three-fund portfolio of U.S. stocks, international stocks and bonds does the job. Since each ETF owns thousands of individual companies, three ETFs offer excellent diversification. Solid performance. If you worry that a planner will deliver higher returns, that’s debatable. Plenty of data suggests index funds, which mirror the market, generally outperform most actively managed strategies. Tax efficiency. Taxes also make a difference when investing. In a taxable investment brokerage account, trading can rack up short term gains, which might up your tax bill. Whereas, investing in index funds, which have minimal turnover, tends to keep taxable gains at bay. [embed]https://youtube.com/watch?v=oHvlSW9iDCM&si=Ko7nc9FUtbfSzGmy[/embed] The Case for a Financial Planner A good planner is not just building your portfolio. You’re paying for something very different from asset management. Behavior coaching. The biggest wealth killer isn’t necessarily fees. It’s panic selling in a