I’ve been thinking a lot lately about the line between managing our own money and handing over the reins to a professional.
After a recent and incredibly insightful conversation with financial planner Dana Anspach, I decided to sit down and record a solo “10 Things” episode of the Earn and Invest podcast to tackle this exact dilemma.
In the personal finance community, there is a loud, persistent narrative that you should always manage your own money to save on fees. But the truth is much more nuanced than that. The skills required to build wealth are fundamentally different from the skills required to safely spend it down.
To help make sense of it all, I split this new episode into two distinct halves: five insights for the accumulation phase, and five insights for the de-accumulation phase.
Here is a quick look at what I cover.
The Accumulation Phase (Things 1–5)
During your younger, wealth-building years, managing your own financial plan is actually fairly straightforward. In the episode, I explain why DIYing is so manageable early on:
It is easier during accumulation. When you are building wealth, your main goal is simply to heavily allocate your savings into broad-based equity index funds. It is actually quite difficult to make a catastrophic mistake here.
Emotions trump knowledge. The hardest part of this phase isn’t the math; it’s managing your own psychology. If you find yourself panic-selling when the market drops, hiring an advisor is a wise choice, not a failure.
Just keep buying. To borrow a phrase from financial writer Nick Maggiulli, continuously buying equities over decades is highly likely to result in long-term success.
Market beta is good enough. Chasing market-beating returns (”alpha”) through active stock-picking is incredibly difficult. Accepting standard market returns (”beta”) through index funds makes DIY investing highly manageable.
Bonds and cash are less important. When you have a reliable job (your “sweat equity”), you don’t need to drag down your long-term returns by holding excessive cash. You want equities to do the heavy compounding.
The De-accumulation Phase (Things 6–10)
Once you retire and stop earning a regular income, the financial landscape changes drastically. This is where safely DIYing becomes significantly harder:
De-accumulation is a different ballgame. Transitioning to spending down your wealth is highly complex. Mistakes with taxes, health insurance credits, or Medicare premiums (IRMAA) can cost you dearly.
Returns become less important. In retirement, your focus shifts from maximizing growth to risk mitigation. The goal is no longer pure financial efficiency; it’s preserving enough wealth to decrease your anxiety and let you sleep at night.
There are more decisions to make. How do you draw down taxable accounts vs. Traditional IRAs vs. Roths? How do you manage conversions and the Net Investment Income Tax? The sheer volume of decisions multiplies.
Cognitive slowing happens. As we age into our 70s and 80s, our decision-making abilities naturally decline. This makes retirees vulnerable to missing critical payments or falling for scams. Having a trusted professional or family member in place before this happens is vital.
You should think less about money. The ultimate goal of retirement is to focus on purpose, identity, and connection. If DIY administration causes you stress, paying for professional help to take that burden off your shoulders is a priceless investment.
Listen to the Full Episode
Are you struggling with the transition from building wealth to spending it? Do you wonder if you should finally hire an advisor to look over your drawdown strategy?
Tune in to the full episode to hear me unpack each of these ten concepts in much greater detail, and learn how to build a financial plan that supports your life—rather than a life that revolves around your finances.
Join the Conversation I would love to hear your thoughts on DIY planning versus hiring an advisor. Send me an email and let me know how you are handling your own accumulation or de-accumulation phases.
Also, a quick reminder about our schedule here at The Purpose Code Substack: you can expect companion articles and show notes every Monday and Thursday, with traditional blog posts and community polls going live every Wednesday.
Thank you for being part of this community!
Good points. I cannot fathom paying someone 1% AUM or 20k flat per year to handle my money. I am more open to changing approach as I get closer to death and need a plan for my wife.
I exited the traditional money sucking financial services industrial complex 10 years ago to Catch Up to FI as a DIYer, simple but not always behaviorally easy. At 60 I took a deep dive into finding the right “real” financial advisor for me and my family for many more principled reasons than you even outlined. I view my advisor as a collaborator, “insurance policy”, an asset class unto himself in my portfolio. One must calculate the “expense ratio” of advice and wealth management if desired. One must calculate the lifetime cost and ROI. This is doable! Net investor return = investment return - investor return which is a function of the very real human “behavior gap”. This has been studied to be an average of a 2% reduction in CAGR based on estimated/backtested portfolio composite CAGR. The DALBAR annual research study confirms this. Vanguard and Morningstar have studied advisor “alpha”, “beta”, and “gamma”. Alpha is not the expectation that an advisor beats market returns. Beta is the value an advisor provides to close the behavior gap limiting tax drag, maximizing lifetime retirement income, reducing investor errors in managing the multiple interactive variables retirees face in retirement, and behavior buffer from “altering” the course, tweaking a portfolio and reducing returns. Narrowing the behavior gap improves returns and therefore spending power. This alpha closes the net investor return drag to roughly .8%. One subsequently calculate the lifetime cost of working with an advisor. In my case it will $8400 per year inflated at my advisors personal business inflation rate. Using a CPI of 2.5%, that it a lifetime cost of roughly $400,000. The current expense ratio of using my advisors personal business is $8400/6,000,000 or 14 basis points! That is a low, value based price for an “alpha producing” asset class that closes the behavior gap drag on my portfolio by mor then 1% or a net gain of 86 basis points! Clearly there is a tipping point based on net worth and cost of comprehensive financial care/planning. Generally that is probably around 2-3M NW. At 2M the ER is 42 basis points. At 3M it is 28 basis points. Obviously this changes as the annual cost of advice increases. The range of flat fee comprehensive real financial wealth care is $7500- 20,000. If you use episodic hourly or flat fee project based advice, the annual cost goes significantly down and therefore does the ER! The “soft” non numerical sides of good financial advice can be invaluable as well. A TDF can be “cheap financial advice” at an entry level. There is an average 1% CAGR performance drag on portfolio returns, but, if using best in class low cost optimized simple TDFs, the behavioral gap reduction bonus can make a significant part of that CAGR performance drag! The orthodoxy in the FIRE DIY movement against advice is unfounded! Only the most disciplined and knowledgeable investors can cost efficiently close the behavior gap an approximate investment return in their portfolios. We are not Homo Economicus! We all make mistakes. Minimizing your mistakes and human drag on your portfolio for most requires some level of expert help! Would you take care of your own medical and mental health? I think not. Finding the right advisor for you can be difficult, but it is getting easier all the time with knowledge, financial literacy, networking, and even AI queries. Do not overlook the tru value of good advice!