DIY investing can put nest egg at risk

Dear Eric,
Financial advisers are professionals who earn compensation for their services. That said, it's important to understand how your adviser is paid. That knowledge is a part of your relationship with the adviser.

If you don't understand how -- and how much -- your adviser is paid, ask him or her. An earlier Dr. Don column, "How a financial planner is compensated," explains the different models. A financial adviser isn't necessarily a financial planner, but that's a column for another day.

I'm not quite sure how you're going to go it alone in buying these funds. According to the firm's Web site:

"The American Funds are distributed through financial advisers because we believe that all investors benefit from ongoing professional advice. We recognize, though, that investors have different preferences for paying for that advice. No matter which share class you choose, American Funds' annual expenses are among the lowest for comparable funds, as measured by LipperSM Inc."

The site does spell out the different

I can't tell if you have the aptitude, skills or knowledge to go the do-it-yourself route when it comes to investing. Taking the essence of your current investment strategy and replicating it in another account that has lower fees or expenses is possible, but that doesn't make it the right thing to do with your investments. Will you know when to change your asset allocation or when to rebalance your investments?

Talk to your adviser about his or her pay and your concerns. If you don't feel you're getting your money's worth, it may be time to move on. Keep in mind that there can be a tax impact if a position has to be liquidated because it can't be delivered out to a new account.