In the mid 1980s, I took a pre-calculus course, which required purchase of a scientific calculator, which cost me $30. It was not programmable, nor did it perform graphing functions or anything remotely as cool as a Grade 11 math student would use today.
Over the next few years, as I took various math, accounting, science, and business courses, I used it heavily and became quite attached to it. When the battery cover broke, I held it in place with some black electrician's tape. It had its shortcomings, but I knew its functions intimately, and felt lost without it at school.
Toward the end of my business degree, I was still using the old clunker when we were studying multiple regression analysis in a finance course we dubbed, The Grauer Power Hour. It was actually a three-hour evening course, conducted by a Professor Grauer, who was known for his grinding lectures proving lengthy mathematical and statistical models. The lecture room was one of the smaller ones on campus. It had two large (roughly 4x8) chalkboards at the front, with a sliding board which could be moved to the left or right as he scribbled out a formula. This same arrangement was at the right side of the room, making 6 large chalkboards in all. One evening he filled all six of them with one mathematical formula, then started again at the first one. We were all meant to understand it, and to be able to repeat the exercise on an exam, using data from a "real life" example. At one point I asked the professor to slow down for those of use who were malnourished as children, but to no avail.
A few days later, while preparing for the exam with a study partner I sat scratching my head. We had been working on the same set of problems in separate study booths, checking one another's answers every few minutes to see if we were on track. Consistently my partner was done well before me. I began to feel mentally slow after this scene repeated itself a few times. When we started doing just one or two questions in each set, he was done nearly instantly, and I was still working painstakingly. I could smell overheated circuitry in my old calculator (or was it my brain steaming off a foul smoke?) I thought I saw a small puff of grey smoldering from the calculator's keys as I feverishly punched in the 6 chalkboards full of formula and data for each question.
By now you may have guessed what should have been obvious to me at that point. My friend was using a financial calculator, which automatically performed all the complex functions of the Grauer Power Hour in a few short seconds. It was an unpleasant revelation. My stunning stupidity and penny-wise, pound-foolish strategy -- cleaving to my old coal-powered beast of a calculator was costing me dearly. I would fail the crucial exam without an upgrade.
After talking it over with my wife, we decided to spend the $180 required to buy a programmable financial calculator, a huge sum for us at the time. This thing was amazing. I pumped it full of formulae and data and was awed by its capabilities. I even felt guilty enough to ask professor Grauer if I could legally bring it in to an exam. He replied that no calculator would make on of his finance exams one bit easier. Oh, okay. Thanks.
I'd like to draw that pound-foolish analogy into my current existence as a financial advisor, and say conclusively that all professionals are worth their fees. Like an upgrade to a better calculator, the numbers should work. They have tools at their disposal that most people are unaware of. However, the truth is even more complex than that. There is no doubt that we have training and resources that the average person doesn't have, but this question, (of whether to do it yourself or hire a pro) is more akin to the conundrum of whether or not to hire a contractor to take care of a home renovation project.
Like building contractors, some advisors are more conscientious than others. Sadly, some have been notoriously dishonest. Thankfully, many others have impeccable scruples and can be trusted to follow through with good workmanship and integrity. A good advisor adheres to industry requirements to 1) know his clients deeply enough to advise them properly, 2) put clients first in all transactions, and 3) obtain current, updated training. Competency is crucial, and honesty is indispensable. Under these conditions spending the money on an upgrade makes sense.
Mark Ryan is an advisor with RBC Wealth Management, Dominion Securities Inc (member CIPF). He can be reached at 250-960-4927, or by email: [email protected].
