Financial Advisors vs Doing It Yourself

We are all aware of how the world around us has changed over the last 3, 10, and 20 years.  Technology is King, and almost everything can be “Googled,” instead of learned.  Car broke down, Google “engine stopped running.”  Feeling sick?  Google “achy head and stuffy nose.”  Don’t want to pay for someone to construct the deck?  Google “easy deck construction.”  Simple, right?  Until you do more damage to your car, you find out you don’t have a cold but COVID instead, and your neighbor falls through the deck.  Just because you can read about a skill online doesn’t automatically grant you the ability to use said skill.

​The same is true of investing.  Many of the people I talk to about Majestic have the assets they need to achieve their goals, and the intelligence to invest them in simple mutual funds.  And if investing was as simple as going to a website and buying the one fund that will get you to your goal, everyone should fire us and google their way to financial freedom.  However, we all know it’s not that simple.

If you look at the 10 top companies (based on market capitalization) from 1980 to 2000 to 20023, there is not a single company from 1980 that appears in 2023.  In fact, many of the companies from 1980 disappeared (most through mergers) prior to 2000.  While a technology company has held the top spot in all three years, it’s changed each time.  In 1980, IBM was the largest company in the world with a $35 Billion cap.  In 2000, Microsoft took the top spot with a $586 Billion cap.  Just 23 years later, Apple crossed the $3 Trillion cap level.

Just as the companies that you would invest in changed, so did the companies you invest with.  In 2000, there were a handful of companies that offered “on-line” investing, led by Goldman Sachs, Prudential, PaineWebber, Ameritrade, Schwab and E*Trade.  Very few (relatively speaking) clients were interested in on-line anything – banking, shopping, or investing.  In 2024, there are far too many on-line platforms to name.  However, here are a few that may not be as well known but can be found on a google search: Betterment, Fundrise, Robinhood, Ally Invest, eToro, Firstrade, Yieldstreet, Tasty Trade, Stash.  Each of these sites offer different hooks to get you in, levels of services and fees, and “advice.”  All you have to decide is how much time and money you want to spend while working as your own financial analyst and broker.

And that’s the reason we talk to prospective clients first – we are not interested in charging clients fees just for them to do it all themselves.  We want to make investing easy and profitable even when we don’t control whether Exxon Mobil is the 5th largest company in the world (2000) or Saudi Aramco is the third largest (2023).  We don’t want a client who wants to google “why didn’t I make as much as the S&P 500 in 2023?”  We want to have that conversation about why they didn’t have every dollar in the portfolio invested in the Magnificent 7 (Google it…).  We know that the online companies will allow you to pay them less money for the right for you to do all the work.  We know that the online companies will allow you to pay them to use tools that may not be helpful in deciding if your money should be invested in ABC or XYZ company.  At Majestic Financial, we want to actually help you reach financial goals, not offer you a second job you pay for.  Not everyone needs a human advisor – or wants one.  But we aren’t interested in that person as a client, and we won’t compete with Robinhood.

So, Google all day long, and enjoy learning just enough to be dangerous.  We will keep investing in the ways that make the most sense for our clients.  And if anyone happens to talk to Laurie, please tell her I found easy instructions for remodeling bathrooms online.
 
Written by Sean Budlong, CFP®, AAMS, Chief Executive Officer, Majestic Financial, Financial Consultant, RJFS
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Disclosures:
*Any opinions are those of Sean Budlong and not necessarily those of RJFS or Raymond James. The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
*The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
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