Should You DIY Your Personal Finances or Hire a Financial Planner?

I just returned from the RTAG (Rotary to Airline Group) National convention in Denver this weekend. My initial thought was, “What pilot shortage?!?” I don’t know the official attendance, but it was well into the thousands. The lines of people in custom-fit suites for each airline seemed hours long.

I enjoyed speaking with all the pilots looking to transition from the military to the airlines, as well as those currently employed in airline jobs seeking to advance to the next level of aviation. And for their sake, I hope the airlines and fractional carriers open the hiring floodgates sooner rather than later!

It reminded me how blessed those who currently have their dream airline job are and how fortunate (and old) I am to have had a dream military and airline career already in the rear-view mirror!

Fortunately, I attended the RTAG convention to answer financial questions and represent our financial-planning firm for pilots, Leading Edge Financial Planning.

During our conversations with pilots, we not only discussed the potential of their next airline job, but also explored their potential future professional pilot journey, the challenges and opportunities of the airline industry, and how to maximize their massive financial potential.

One of the most frequently asked questions we addressed during the convention was, “Do I need a financial planner?” Or “Why might I consider working with a financial planner?”

Clearly, as the business owner of a financial planning firm that works with pilots, I wanted to knock this question out of the park. However, I always answer this question the same way – “Not everyone needs a financial planner.” There are some DIY investors who do a great job. In fact, I found a few of those at the RTAG convention, and I quickly asked them to come to work with us to help other pilots!

Here are a few thoughts and considerations to help you determine whether a financial planner is right for you or whether you should “go it alone.”

In my experience, it seems that many professional pilots reach a point in their career where the dollar amounts are larger than they ever anticipated. This adds a sense of heaviness to managing their finances alone. They know that small mistakes with very large numbers are now more significant than they were when they were perhaps a brand-new first officer. This is akin to your first flights in the Cessna 172 versus the 787 Dreamliner with 250 passengers. It’s serious now!

On the other hand, personal finance DIYers, unlike flying a Dreamliner, can be successful with the right mindset and aptitude. If someone enjoys reading financial books (watching YouTube/Tik-Tok/Facebook doesn’t count for obvious reasons), keeping up with their airline benefits, IRS changes, and work to understand investment basics, I believe they can be successful. And I’ve met many pilots who are doing just that. It’s impressive!

Knowing the nuts and bolts of investing, taxation, and airline benefits is important. However, I think the most essential characteristic of a capable DIY investor is the right mindset.

Investing and personal finance can be like sports or other challenging endeavors where the result may have turned out well in the short term, but the execution was poor. For example, my airline buddy tells me about a hot stock tip. I invest in said stock—the price goes through the roof! Voila! We’re both geniuses! In other words, a good DIY investor knows the difference between luck and skill. And they don’t let their ego or their pride mislead them. The more a good DIY investor learns about investing, the humbler they will be.  

Finally, DIY investors know that making investment decisions based on gut feelings or emotions is a big no-no. Your gut may work well in other major decisions of your life, but it can work against you in the long-term world of investing. For example, if you’re tempted to buy any investment solely because it’s gone up in price, you may reconsider the DIY path.

I believe avoiding the emotional side of investing is the most challenging part of being a DIY investor. Evidently, Vanguard does too. They recently conducted a study called Vanguard Advisor’s Alpha. In the study, they attempted to put a numerical value on the net returns a trusted advisor can add to their client’s portfolio. Keep in mind that Vanguard has its own slew of financial advisors, so they’re not completely conflict-free in their study. As you can see in the chart below, “behavioral coaching” adds the most value by far, ranging from 0 to 200 basis points (2%).