Why Smart DIY Investors Are Realizing They Need Professional Advice

This week on The Capitalist Investor, Derek Gabrielsen and Dave Abate break down why even the most disciplined do-it-yourself investors are realizing that professional financial guidance isn’t a weakness—it’s wisdom.

They explore the psychological and practical pitfalls of managing money alone, from behavioral biases to tax inefficiencies. Derek and Dave discuss how proper retirement income planning, tax strategy, and risk diversification can extend the life of your portfolio by up to 20%.

Plus, they share stories from real-world client experiences—highlighting how “doing it yourself” can sometimes mean missing opportunities for smarter, long-term gains.

Whether you’re nearing retirement or already there, this episode will help you rethink what true financial independence really means.

#TheCapitalistInvestor #RetirementPlanning #WealthManagement #FinancialAdvice #DIYInvesting #TaxStrategy #FinancialPlanning #BehavioralFinance

Transcript

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You've done everything right. Worked hard, build your portfolio, paid off your house, and now you're 65. You've been managing your money on your own for decades. And let's be honest. It's gone pretty well. But down deep, you're starting to wonder. Am I missing something? Don't worry. We won't tell your wife. Today we're talking about why even the smartest DIY investors are realizing that professional advice isn't a weakness. It's wisdom. All right, everyone, thanks for listening. Today we have a special guest back, Mr. Dave Roberts. Dave, how are you doing today, buddy? Well, excited to be here, Derek. You make it sound so believable every single time. And I really appreciate that. Of course, of course. So, So, yeah, our boy Tony's on assignment down in, Orlando. Talking to the mouse, I think so. Hopefully that's, that's going well for him. He's definitely got the ears on. Right? Yeah, exactly. The ears. And a nice churro. Yes. Yeah. It's good times. Yeah. He, You know, I told them I would give them, you know, any and all advice he needed for Disney since my my family's pretty crazy about it, but, he's doing him. It sounds like. It sounds like it's actually going to be a nice, relaxing vacation, which is not what you're going for if you go to Disney. No, those usually don't play out that way. But, good luck to them. Yeah. So. All right, well, so, yeah, you know, we're, we're kicking around different, topic ideas and, you know, the, the, the topic of you know, do it yourself. Investing, always seems to to come up and come around, you know, whether we're talking to, you know, you know, people out there who, who are not working with the firm or talking with clients who have friends, that, that are doing it on their own. And, you know, it's, it's a very interesting topic, honestly. You know, it's kind of like, it's kind of like the Andrew Berry and the Cleveland Browns. Like he actually had a good draft this year. Did he do it completely by accident? We don't know, but probably. Yeah. It's like every six draft classes you have to hit a cop. Exactly. It's the law of averages. Yeah. So, yeah. You know, it's, you, I think probably the main point, the that we'll try to get across here is that there's a lot more, to planning for your retirement than than just, you know, eking out every single percentage points that you can, you know, on your gains. And you know, I think I think also it's not necessarily, it's not necessarily about preventing disaster. It's more obviously that's that's a goal, but it is more, breaking bad habits, maybe the that if you've been doing it, yourself for a long time, that, that, you know, could lull you into kind of, like a false sense of security, almost. Yeah, I definitely, I, I think it's almost like the seasons of life. Right? It's like you start off and maybe you have all the energy in the world to kind of take this, this task on of, of building your portfolio yourself and managing your finances. And, and that's all well and good. Like, especially when you're younger, life's a lot simpler, right? You're kind of any accumulation mode. Like long story short, it's like the more you save, the better off you're going to be kind of thing. So if you have a reasonable investment strategy and it allows you to kind of keep pace with inflation, like you're going to put yourself in in a pretty, pretty good spot in the future. Yeah. But then life kind of unfolds and things change. So I think that's where the opportunity comes up, where people may be have a hard time transitioning, like, hey, I'm used to like driving on the highway and there's really like, no braking and I'm going one speed the whole time. And now I'm kind of getting close to the exit ramp and I gotta make some some changes here. Traffic wise. Yeah for sure. And, you know, we can kind of get into it here, you know, some, some of the issues that I've just seen over the years, from DIY investors and, and it'll be we'll mention it again is kind of the, it's called behavioral finance. In, in the academic world, which, you know, I always find like a fascinating topic. You know, why why do people, why do people make the decisions that they do? And, you know, let's be honest, the, you know, you turn on the TV and it's full of green and you're like, man, what did I miss? What did I miss? Right? And you, you turn it on and it's it's full of red and you're like, look, I told you so, right? So, it is not a is not a, a short term proposition. You know, we're we're we're looking to build out a portfolio that's going to, you know, stand up against the the good times and the bad and most importantly, kind of meet the goals that you need to hit, to have the retirement that you want. Yeah, absolutely. Derek, we've we've hit on it so many times. Like investing itself is just not intuitive. Right? Right. We kind of get excited at the wrong times and scared at the wrong times in terms of the opportunity ahead. But you know, the the angle that I even see, like keeping investments outside of the discussion is really the tax planning part. Like that's to me, the biggest opportunity is to control the controllables. Right? So it's kind of like, hey, I'm transitioning from my working years to my retirement years. Like, how do I build that retirement paycheck that's going to get me through while I no longer have that income stream happening? Like, there's so much opportunity in that spot, like that's that that's I think where I when I talk to people and clients, I see come through the doors like that's the one that's kind of scaring them. Like, am I leaving dollars on the table? Yeah, absolutely. You know, it's and it's something that you can like, like you said, it's a it's a tangible thing that you can plan for, right? We we we don't. We're sitting here today. We don't know when the next market crash is going to be. We don't know the exact date. So, that that is tough to, you know, predict. Obviously there's things we can do in the portfolio to, to help cushion that. But but tax issues when, what, especially long term tax planning, which is what we always talk about here is really going to be, tangible, right? You can you can look at it, you can say, okay, here's here's what we're projecting, and here are the tangible steps that we can take to save ourselves actual dollars in our account that that, you know, also doesn't go into like the bottom line return report. Right? So you can make, you know, a series of Roth conversions over a seven years and save yourself, you know, $75,000 in future taxes that that doesn't show up in your statement. Right? But you've made you've made good choices to, to help out your plan. Absolutely. And, you know, there's research out there. We've probably talked about this one too much, but, if you optimize like it's called, like your distribution strategy, right? If you optimize the sequence of which accounts you're drawing from when depending on the tax, you know, tax situation that you're this the studies show you can have your money last up to 20% longer. So think about like if you if right now like just the fall it's going to last 20 years. You're talking about 24 years now you're buying yourself four more years of retirement solvency. That's a big deal. Yep. Absolutely. And, you know, I think I think that's one of the main pieces, that that gets a little different when you get towards retirement is really the, the income, you know, where where is it coming from? And, and like you said, just, you know, how is it taxed? If you're not 65, maybe you're younger, maybe you're 55. Tax savings strategies are important, right? We've kind of just been told our whole life, hey, just save all your money into your 401 K, right? And and many people aren't saving more than than the, you know, whatever. It's up to now, $27,000 or whatever you can put in, annually, into the plan. You don't necessarily just have to slam every single last dollar into that 41K, right. There's a new rule that we talked about, where the, the, the catch up provision, isn't allowed to go in anymore into the traditional if you make over a certain threshold. So a Roth, might be an option for you. A lot of people ask me questions on, hey, should I be saving into my 401 K, traditional side or the Roth side? You know, that's not something that I can just answer. You know, it's got to be kind of based on your specific situation, but I think, you know, if you're not approaching retirement and you're a little bit younger, give some serious thought into how your savings, how you're saving, it doesn't necessarily need to be all in the, in the traditional side. And, and that's really where the long term tax planning comes in. And Dirk, you're, you're kind of like, unpacking some really important things. And you're also shedding light on how complex, how fast, how complex this stuff gets. Right. And the other like thing that we see a lot of times is when we're talking with folks is when we're sitting down, you know, with a couple, we're kind of getting to know them a little bit. And what we find out a lot of times is even if one of the partners is super engaged and they've got this down pat and they know all this stuff inside and out, and they're following all the tax law changes. Typically what we see is like one person super engaged and the other person is just not their thing, right? Not their cup of tea. Like, this is not my lane. Like, you know, Joe figures all this stuff out for us. Well that's great, but what ends up happening is, like the light bulb goes off in Joe's head and it's like, hey, like, Mary doesn't really care about this stuff. Like, I need to kind of find someone where if I'm not around or, you know, my mental faculties start to decline. Like, who is going to help us out? Like we need to get partnered up with that guide sooner rather than later. Absolutely. And you know that we've been doing this for for a little bit now. And that's that's the conversation I have, you know, time and time again, it's, you know, and it's not always, you know, the, the, the husband, you know, that that takes over. But, you know, it takes over the finances, I should say, but it honestly usually is, and and that is the conversation is like, hey, you know, I, you know, it's kind of split up the jobs and, you know, this one was mine. And, you know, if something happens to me, you know, I need to make sure that that, that my spouse knows what's going on and has has someone that that can help them out and that that is a that is a huge thing. You know, I think, you know, whether it's the planning or the investments or or it's just nice to have have someone that that can help you through, through those things for sure. For sure. And so as we, you know, we work together and we kind of figure this stuff out. The other like silver lining, I'll call it like byproduct where these DIY, all of these DIY, DIY folks, like they really get a benefit is, you know, in order to put yourself in a position where you are ready for retirement, like usually you're really good at saving, right? You might be decent at investing, but you're really good at saving, like having that budget worked out. And what we find is in that transition from accumulation or you're working years into retirement, there's really like a hesitation or there's a, self control about like actually letting yourself spend the money now. Like now that you're not working any longer. And what we help clients do is kind of understand how much cushion or how much room there is in their budget to give themselves permission to spend like you've accumulated this nest egg. It's here to support you during your your retirement years and enjoy the lifestyle that you've, you've earned and built. We can now give you permission. Here's what the numbers say. Like you have another $15,000 a year to play with. Knock yourself out. Absolutely. And I have, have I have that conversation quite a bit too. But yeah, you know, it's it's difficult to go from saving your whole life to end to spending and spending freely. Right. Like you said, it's, you know, you have to be good at saving to get into that position. So it's it's a it's a difficult transition. And you know, that that's, you know, we always offer like a second opinion, on your, on your overall situation, you know, that that's kind of, you know, I'm sure a lot of advisors, you know, throw that out there. But, you know, I so if you are in that boat and you do need a second opinion, you know, please don't please don't hesitate to reach out. But kind of my point on this is, I've handed out a lot of second second opinions through the years, and I don't think I've ever once told someone like, hey, man, you're doing great. You you don't need me at all, or us. Right? And, that's not, that's not a knock on on anyone. It's just, you know, it's is not there. It's not their full time job. It's not their area of expertise. You know, there's there's a there's an unfortunate, there's an unfortunate, problem in this industry where people think they can kind of go on the internet and get the right answer, but what they really just get is a bunch of advertisement for exactly for, you know, financial products or, you know, financial advisors, whatever the case may be. So, if in that regards, it becomes very difficult to kind of seek out the right answer. You know, if you're if you're buying a car, you can probably go online, get some opinions. You know, get reports and probably make, you know, an informed decision. You know, if you want to buy an annuity and you're going to use the internet as your guide, you know, it's going to be it's going to be difficult. Yes, yes. And that it goes back to just comfortability finding, you know, a person that speaks your language that into your point. Like a lot of times when we run the diagnostically, you might be doing a really good job at, the one thing you think is the only thing to do, right, right. Save and invest in this. Like now it almost like brings me to the, you know, to the, to an oldie but goodie song. All right. Here, this is blow Your Mind. You may have heard of, mo money. Mo problem. Yes, I have this is. From the late 90s. This is, an artist by their on The Notorious B.I.G. Class. A lot of times, like when you've done so well and you've built this nest egg, you create unfortunate like potential tax pitfalls. Right? So you gotta find that person that can help you weave through and navigate the system so that it doesn't turn into something, worse than it needs to be. Yeah. And, you know, the last thing I will say is, listen, every once in a while, you know, I've, you know, it is not a matter of, you know, choosing to to work with us or not. You know, there are some people who have been doing it for so long. And the word I get a lot is comfortable. You know, I'm I'm I'm much more comfortable doing it this this way. Right. You know, I've, I've had I've had, a large number of, of horror stories, you know, people saying in cash that since 2010, you know, tons of, of examples of people just being in, you know, highly concentrated positions, you know, 80, 90% of their entire net worth. And to one stock, you know, these are the things that we're talking about when it comes to a second opinion. So, you know, if someone does give you that second opinion, you know, take it to heart. Absolutely, absolutely, absolutely. You gotta kind of know your limitations, have a little bit of an open mind. And just because that, you know, Apple stock you picked ten years ago got you to where you are, it might be time to kind of, you know, call it a go into victory formation. Exactly. Right. Like you kind of spread things out now so that you can prevent a potential, you know, draw down on the one stock that got you there, like, like now let's spread things out and make sure we don't lose the game. Absolutely. Well, Dave, thanks so much for, stepping in this week. I always appreciate having having you on. And, if you guys have any questions or comments, concerns, please hit us up. If you're looking for that second opinion, you know, it's, it's a it's a good process and it will definitely give you some, some good information, even if, if that's all that you're looking for, that that is totally cool. So, but thanks for listening. If you have any questions, hit us up at info@connect.com and we'll talk to you next week. The opinions expressed in the podcast. Are for general informational purposes only, and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.