DIY Investing vs Hiring a Financial Adviser: Who Comes Out Ahead?
It’s never been easier—or cheaper—to invest on your own. With the rise of index funds, commission-free platforms, and a flood of personal finance content, DIY investing has become a viable option for many. But just because you can do it yourself, does that mean you should?
Plenty of investors choose to work with a financial adviser, not to chase hot stocks or time the market, but for something far more valuable: structure, discipline, and long-term strategy. This post explores the differences between DIY and advised investing, and unpacks the academic evidence on who tends to end up better off.
What the Evidence Shows
Several studies compare outcomes between DIY investors and those who work with advisers. The results consistently suggest that advised investors often achieve better long-term outcomes—but not necessarily because their portfolios perform better.
A widely cited Canadian study by Montmarquette and Viennot-Briot (2016) finds that households who receive ongoing financial advice accumulate between 1.5 to 2.7 times more financial assets over a 15-year period than non-advised households. This improvement arises not from superior fund selection, but from increased savings discipline and reduced behavioural errors.
Vanguard’s Adviser’s Alpha research (2019) estimates that a good adviser can add around 3% per year in net returns. This uplift comes not from market timing or stock-picking, but through behavioural coaching, tax efficiency, portfolio rebalancing, and goal-based planning.
In the UK, a study by the International Longevity Centre and Royal London (2017) uses data from the Wealth and Assets Survey to show that individuals who received professional financial advice between 2001 and 2007 ended up, by 2012–14, with:
£13,435 more in financial assets, and
£27,664 more in pension wealth
than otherwise similar individuals who did not receive advice. The study also finds that those who maintain an ongoing adviser relationship benefit even more than those who receive one-off advice.
Figure 1. Data taken from International Longevity Centre (2017).
The Real Value of a Financial Adviser
Most of the value that a good financial adviser delivers has little to do with investment selection. Instead, advisers help clients make informed decisions across multiple dimensions of their financial lives. Their value lies in the planning process, not performance prediction. Key areas include:
Goal setting and prioritisation: Advisers help clarify what clients want their money to achieve—whether that’s retiring early, supporting children, or leaving a legacy—and structure a plan to get there.
Cash flow planning: One of the most underappreciated aspects of financial advice. Advisers use sophisticated financial planning software to create detailed, personalised lifetime cash flow models. These models integrate income, spending, tax, investment returns, pensions, property, inflation, and other real-world complexities to forecast an investor’s future financial position. This is not a one-off exercise. It’s an ongoing, dynamic process—typically reviewed annually—to reflect changes in markets, legislation, earnings, and family circumstances. The purpose is simple but powerful: to ensure that the investor remains on track for their long-term goals, particularly retirement. For many, this kind of holistic and proactive planning is simply not feasible without expert support and the right tools.
Tax optimisation: Whether it’s making the most of ISAs and pensions, managing capital gains, or planning for tax-efficient withdrawals, advisers improve net returns by structuring wealth intelligently.
Behavioural coaching: Perhaps the most critical contribution. Advisers act as a rational anchor during volatile markets, discouraging panic selling and performance chasing, and reinforcing long-term discipline.
Insurance and protection planning: Many DIY investors underinsure or overlook major risks. Advisers help assess vulnerabilities and recommend appropriate cover for illness, death, or loss of income.
Estate and inheritance planning: Navigating wills, trusts, gifting, and inheritance tax is complex. Advisers provide clarity and ensure wealth is transferred effectively across generations.
Ultimately, a good adviser functions like a financial GP—someone to consult when circumstances change, and someone who takes a long-term interest in your financial wellbeing.
What a Good Adviser Isn’t
A good adviser is not someone who attempts to pick the next winning fund or who attempts to beat the market with tactical or strategic asset allocation. Chasing outperformance via discretionary active fund management is not a good reason to hire an adviser. In fact, layering expensive active management on top of advice fees often erodes the net benefit of receiving advice.
Research from S&P Dow Jones Indices (2023) shows that most UK actively managed equity funds underperform their benchmarks over multi-year periods. Advisers who follow evidence-based investing principles—using low-cost index funds, sensible asset allocation, and a long-term focus—are much more likely to help clients stay the course and avoid costly mistakes.
Should You DIY?
If you’re financially literate, emotionally disciplined, have the time—and crucially the desire—to manage your financial affairs, then DIY investing can be a perfectly sound approach. Low-cost platforms, index trackers, and tax wrappers like ISAs and SIPPs make it feasible to implement a globally diversified portfolio with minimal fuss.
However, even confident DIY investors can benefit from occasional advice—whether for retirement planning, tax optimisation, or simply a second opinion. And for those with complex needs, significant assets, or behavioural blind spots, working with an adviser may be the difference between drifting and delivering.
Conclusion
Financial advice, done well, is not about outperformance—it’s about alignment. A good adviser helps clients make wise financial decisions, avoid predictable mistakes, and stay on track for decades.
DIY investing may offer lower fees, but the trade-off often includes greater risk of missteps, missed opportunities, and unstructured thinking. The right question isn’t ‘can I do it myself?’ but rather ‘what might I miss if I do?’
References
International Longevity Centre. 2017. The Value of Financial Advice. London: ILC-UK. https://ilcuk.org.uk/the-value-of-financial-advice/
Montmarquette, Claude, and Nathalie Viennot-Briot. 2016. The Gamma Factor and the Value of Financial Advice. CIRANO. https://cirano.qc.ca/en/summaries/2016RP-02
S&P Dow Jones Indices. 2023. SPIVA Europe Scorecard: Year-End 2023. https://www.spglobal.com/spdji/en/research-insights/spiva/
Vanguard. 2019. Adviser’s Alpha. https://advisors.vanguard.com/advisors-alpha