DIY investing? Be prepared to invest some time with that money

Many DIY investors explain that they decided to take their finances completely into their own hands mostly because of some level of frustration with the returns they were getting. Maybe they felt they were being gouged, or they were sick of their adviser hiding when the markets turned south, and perhaps they just felt that every phone call or meeting was attached to a sales pitch of some sort.

I'm a big fan of DIY investing, but I'm also a fan of advice and financial planning. I think we can both agree that good advice is hard to find, and therein lies a large part of the problem. Most people have no problem paying a bit more when they feel they are getting value for their money.

One of the other major factors is that the barriers to DIY investing are very low. A few mouse clicks and you can carry out your own trades.

Contrast this to a similar predicament for an endeavour that is more labour intensive. If you hired a contractor to fix the foundation on your house and they're too slow, expensive, or just unprofessional, you might fire them and have someone else take over. If that second contractor is similarly inept, you would probably suck it up and invest a lot more time finding a third contractor that you vet much more carefully.

You might be more persistent in finding a third party to handle this project because it's clearly a large undertaking due to the physical, equipment, and time requirements.

Certainly, there are DIY investors who have learned the ropes out of sheer frustration, and manage quite well. They may hire a fee-only adviser to help with a financial plan for the less sexy estate, tax, and retirement planning.

Others are incessantly switching strategies and end up with a hodge-podge of investments with no regard for the overall portfolio construction. And then of course, there are those who buy high and panic when markets dip and sell low and lose much more money than the drag of even the highest mutual funds would cost them if they just sat on their hands. Not that I'm justifying that, mind you.

What I would suggest is to take some time to figure out what makes a good adviser a good adviser. That's more than just checking to see if they have a CFP or the myriad other credentials out there. You need to roll up your sleeves and invest some time to learn at least the basics of their lingo. The basics of the " cost matters hypothesis," diversification, how advisers get paid, portfolio construction and more.

If you can learn the language your adviser speaks, you will be better able to find one of the good ones and be better able to determine the value you are receiving for the extra cost.