Advisors Should Turn to Peers To Manage Personal Assets

Financial advisors might be wise to follow the example of doctors and lawyers by hiring professional peers to manage their personal money, experts say.

Doctors don't operate on themselves and lawyers often turn to peers for legal advice. Yet the idea of picking up the phone to reach out to a colleague for support meets with a lot of resistance in the financial planning community, advisor Rick Kahler told Investment News.

After grappling with the prospect for years, Kahler - whose Rapid City, S.D.-based company manages $100 million in assets - to decided to bite the bullet and hire someone else to review his personal portfolio. He was glad he did: The new hire discovered Kahler's life insurance trust had named the wrong beneficiary.

Hiring someone else to oversee your own portfolio can help you identify mistakes you would not have caught on your own. It may also improve business by letting you stay focused on your client's needs instead of fretting over the structure and performance of your personal portfolio.

One advisor told Investment News colleagues give him funny looks when he talks about hiring his own planner, but he appreciates having a fresh eye and an objective viewpoint. Another pro - who still manages his own finances even while admitting most financial professionals are "horrible" stewards of their own money - says in 17 years in the business he's known only one advisor willing to hand his portfolio over to a peer.

A key advantage to farming out management of your personal money: an outside pro can assess your financial situation with significantly less drama and emotion. When personal assets are at stake, advisors aren't immune to the human impulse to pull money out of the market at the worst possible time. One advisor cited in the story admits she might have bailed during the recent downturn if she hadn't had someone else holding her hand and advising discipline. She was glad to have a business partner managing her money during one of the blackest periods on record.