#TBT "Plenty of financial management options out there"

Today we head back to the summer of 1999. The Internet wasn't what it is today, but we did have online trading. In a column in the Mississippi Business Journal, Nancy reminds readers to choose carefully from whom they take investment advice. The Internet has made trading faster, easier, and lowered trading costs, but that doesn't take away the risks associated with investing.

I do my own housecleaning. Well, these days, "H" is handling most of that. After all, isn't that why you have children? Sometimes, I wash my own car, but sometimes I simply don't have time. When my embarrassment overcomes my thriftiness, I take it to a local carwash. I don't do any carpentry work or electrical work or air conditioning maintenance at my home. I know when to call in the experts.

These are my choices. If there is something I can handle on my own, I do it. If it's outside my field of expertise, I pick up the phone. And if I can better spend my precious time doing what I do best and paying someone else to do what they do best, so be it. Sometimes, my choice has to do more with the efficient use of my time than with my abilities.

Those same choices apply when handling your finances.

Some people prefer to do it all themselves. They like to peruse the stock pages. They love to study financial statements. They understand how to access the markets and how to use the tax code to their advantage. They don't need help from a financial advisor. What they need is cheap and efficient access to investments.

And that's where online trading comes in. The advent of the Internet has opened up this area for individual investors. It's the cheap way to go because you cut out the middleman. You place your trade with a machine, not a human being. Right now, there is fierce competition among the online traders to get your business. That means better prices for those trades.

You've seen the ads. E-Trade, Schwab Online, Fidelity Online, and now even Merrill Lynch is getting into the game. But should price be your only consideration?

If you're a day trader, the answer is probably yes. Day traders are those people who buy and sell shares over a short period of time, sometimes during the same day. The success of this practice depends on keeping trading costs low. Personally, I lump day traders in with gamblers. And over the long haul, I think you're more likely to end up with an ulcer than with a profit.

If you're an average investor, you might want more from your online broker than low commissions. The quality of information your broker provides may be important in your investment choices. Also, remember, this is a new industry. There have been several glitches in the systems sending traders scrambling for an attorney. It's not all it's cracked up to be.

I do most of my trades for myself and my clients online. Many times, the system freezes up. When this happens, I have to pick up the phone to get a live trader. I've also had an instance of duplicate trade because of computer problems. When it works, it's great. When it doesn't, it's incredibly frustrating.

Make sure your online trader has a good backup. That means having a phone system and a large enough group of live traders to handle the calls when machines fail. Because they do. Also, you may need to speak to a person to get information before placing a trade. The computer has limited responses. Even when you are an expert, service is important. You may even like the assurance of having a local branch office to help with questions or with handling deposits.

For those people who like to dabble in investments but occasionally want some assistance, online trading may still be the answer. They have the ability but don't always have the time to do the research. For those folks, some arrangement with a fee-only advisor may be best. I have several clients in this category. They call me when they need me, and I charge them for my time. I'm not selling an investment. I'm selling what's in my head.

They call with questions about stocks or retirement planning. They still want to do the work and have the control over their finances. They just occasionally need help. And that's where I come in.

And then there are people who haven't the slightest inclination to handle their own finances. They are wonderful teachers, great doctors, talented artists. But they have no desire to deal with dollars and cents. These are the people who are my bread and butter. They need a financial advisor, someone to select investments and handle the trades.

They have better things to do.

With the changes in the brokerage industry, these folks can benefit from online trading, as well.

Combining cheaper online trading with a financial advisor who gives them the best of both worlds.

From the "do-it-yourselfers" to the "you-do-it-for-me's," there are options for everyone in financial management. Online trading has opened up the world of investing. Decide where you fit on the spectrum. The choice is yours.

--Nancy Lottridge Anderson, Ph.D., CFA, Mississippi Business Journal, June 28 - July 4, 1999

#financialadvisor #fiduciary

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