Do You Need a Financial Advisor?

Planning for your financial future is important, but many people find investing complicated or confusing. Should you pay a professional to help you figure out your investments? Michael Edesess, author of The Big Investment Lie: What Your Financial Advisor Doesn't Want You to Know, tells Jean that hiring a pro isn't always the best way to go.

According to Michael, most people are worried about volatility in the market. What they should be more worried about is getting bad financial advice. In his book, Michael cites studies that show, on average, professional investment Advisors don't perform any better than you could on your own. In addition, he says a large portion of what you could be saving will be going to Advisors' fees. For investors who are ready to strike out on their own, Michael offers this advice:

• Break the habit. End the addiction to investment advice. Once you kick that habit, you can start to look at the right way to invest.
• Relax. Know that ups and downs will happen in the market, and there's no way to predict them. In the long run, even big bumps don't really affect your investments.
• Plan for the predictable. In investing, two things are predictable—fees and taxes. Investing in broad market index funds will minimize both.

When the conversation turns to investing for retirement, Jean offers her own simple plan for doing it yourself:

• Earn a decent living. If you're underpaid for the work you're doing, ask for more or polish up your resume and go find a new job.
• Spend less than you make. Don't live higher than your means.
• Invest the money you save. Each month, take 10 percent of your take-home pay and invest it—a 401(K), IRA, 529 plan or interest-earning money market account are all good options.
• Protect your assets. Make sure everything you've worked for is safe with a combination of life insurance, disability insurance and a will.