Who ya gonna call...for investment advice?

Another flight across the US and time to catch up on reading. In this case, I turned to an Alliance Bernstein survey which was part of its "Inside The Mind of Plan Participants" series. Whom do participants talk to when making investment decisions in their 401k plan? The results are interesting.

46% of surveyed participants make investment decision on their own without consulting anyone. There is a certain logic to this. You know yourself better than anyone else. You trust your own counsel and have no ulterior motive. In other words, you are likely to give yourself the straight-scoop.

And yes, there are plenty of employees in the do-it-yourself category. Research is important as well as self-reflection. Research can help you better understand the investment choices and self-reflection may help you decide what investments are best for you.

Of course, every time I look at my neighbor's yard, I chuckle a little. My neighbor, Steve, is a retired cardiac surgeon. He wanted to buy a whole-house generator so that if a power outage occurred, his generator would turn on with no loss of power. He researched the dickens out of every generator and even how to install one. Steve is a smart man (cardiac surgeon) and also did not want to pay anyone to do the work.

As I look at Steve's yard, I can see the generator shed that was too small (oops), the concrete pad he put down but abandoned because the generator was too near the house, and finally, the generator's electrical box that requires 8 pages of steps to operate. Steve is selling his home and retiring. The new owners are going to hire professionals to install a truly automated generator. Do-it-yourself can have drawbacks.

25% of those surveyed said they make investment decisions after consulting a financial advisor. Again, this makes sense. The advisor likely has quite a bit of training under their belt. They may have years (decades?!) of experience to bring to bear. Then again, I remember the advisors at one bank - ABC Bank - exclusively offered investments that were owned and operated by ABC Bank. Make sure the advisor is acting in your sole and exclusive interest.

And 83% of all surveyed also indicated they involved a spouse or a partner in the investment decision. Again, this makes sense from relationship, succession, and diversification points of view. But what to do if neither spouse/ partner knows much about investments? Research and independent outside council can help.

Finally, don't be ashamed of what you don't know. Ask questions. I was in a 401k 1:1 meeting with a woman who is an expert in installing solar panels. She told me she was nervous to meet with me because she knew nothing about investing. I reassured her by saying that if I was on the roof with a solar panel and a set of tools, I guaranteed she would find me on the roof one hour later having made no progress. We each have our skill sets. I know when to ask for help. In other words, I know who I am gonna call!