Professional Help vs Do It Yourself

A headlight on my car burned out. A repair shop said they could replace it for me for $75. I pulled out the car’s manual from the glovebox and looked it up. Although I’ve never done it before, the instructions in the manual don’t appear to be too complicated.

I went to RockAuto, an online store where I bought air filters for my car before. Standard-issue replacement bulbs cost as low as $3 each. Then I saw a category called “improved visibility” bulbs. I thought If I was going to open it up I might as well replace it with a better bulb.

I bought a pair of GE Nighthawk Platinum bulbs, which claim to give 90% more light than standard ones. I often drive at night in remote areas. 90% more light would be great. I paid $20 for two bulbs.

After I received the bulbs from Amazon, I followed the instructions and unscrewed a couple of screws to get a plastic piece out of the way, removed a bottle-cap like cover, pressed on a steel wire spring, and voila, there was the dead bulb. I put in the new one, put everything back and did the same to the other bulb even though it hasn’t burned out yet. The whole job to replace two bulbs took maybe 20 minutes.

Compared to letting the repair shop do it for me, I saved $55 but I also spent time on learning about the bulbs: standard vs enhanced, types (low beam, high beam), and sizes (H4, H7, 9004, 9007, …). Not that I care that much about headlight bulbs, I have to order the right type and size or else they wouldn’t fit. I also spent time on replacing the bulbs. If I’m not writing these down, I probably will forget what I did by the time I will have to do it again.

Is $75 a ripoff when a bulb only costs $3 and it won’t take them more than 10 minutes to do? No, because letting the repair shop do it for me would be a completely different experience than doing it myself. All I have to do is drive over, wait 10 minutes, and pay. They are selling their knowledge and  experience, not just the part. Because they don’t get a job like this every 10 minutes, I will also have to pay for the idle time and overhead.

Is saving $55 worth doing it myself? Not really, for something that only happens maybe once in five years, but I did learn something and I ended up with a better product. If I don’t know any better, the repair shop would probably just throw in a standard after-market replacement bulb.

Are GE Nighthawk Platinum bulbs the best? I don’t know; probably not. Do they really put out 90% more light? Maybe not. They are good enough for me. I read on the Internet there are a ton of people souping up their cars with HID Xenon bulbs, whatever that means. I’m not in that league.

This experience makes me think about using a financial advisor to manage one’s money. Using an advisor and doing it yourself are completely different experiences. If you want the luxury of not understanding anything about investment, a financial advisor will do it all for you. It’s just that it will cost you money, often a lot of money.

Rick Ferri, a low-fee investment manager, openly admitted that he couldn’t take a client for $500 a year. His firm charges a minimum $3,700 a year. If you want one-on-one help from a human advisor, it’s very hard to escape from paying a few thousand dollars per year. An advisor with the level of knowledge and education you want will want to make a living commensurate with his or her level of knowledge and education. $500 per client per year only works if the company has a huge marketing funnel that makes an advisor’s every hour a billable hour.

But, if you are willing to back away from “just do me” you will save a lot more money than from replacing a light bulb yourself. You also end up with a better product to boot. A little education goes a long way.

A good book only costs $20 or so. Used books are less. Books from the library are free. Vanguard website and brochures are free. Follow the model portfolio in the books by Burton Malkiel, David Swensen, or a number of other authors; they are all good enough. Invest in or mimic a Vanguard Target Retirement fund; they are also good enough. Get portfolio recommendation from a computer; a number of startups offer this now.

I still believe the average investor should use an investment advisor, but they can’t just use an average advisor. It has to be a low cost one: good books, copying a Vanguard Target Retirement fund, the Vanguard Financial Plan service, new services that deliver advice from a computer model (Wealthfront, Betterment), etc.

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  1. Money Beagle says

    Changing bulbs on the car is always something I do myself. You should check them every month or so just to make sure you don’t have any burned out. My biggest issue is forgetting if I have spare bulbs and then going out and buying more unnecessarily. Still cheaper than getting it done professionally.

  2. RealistTheorist says

    As someone who rolls his own investment advice because it is fun, I’ve never thought of it this way — that an adviser needs a couple of thousands to make the deal viable — but it does make sense.

    BTW: When I checked out the higher-luminosity bulbs, I found that they have shorter lives than the regular ones. Also, the instructions missing from my car-manual were “never touch a new bulb with your fingers; it shortens the life”.

  3. Steve says

    Good, thought provoking post. It’s very satisfying to fix stuff, that on it’s own carries imputed value.
    One big difference between going to the shop for a car repair and going to an Advisor, a decent repair shop or repair product will give you some sort of warranty or at least a means of recourse. If the bulb burns out prematurely or, worse yet, overloads your battery and causes other damage, you can generally prevail upon them to fix it – they were supposed to be experts and have a reputation to maintain. However, if you cause damages to the car yourself, you are on your own. Not to endorse going to shops, but some ‘disorganized, time-pressured’ people really shouldn’t work on their own family cars – there can be an element of danger.
    However, Financial Advisors can give damaging advice, or advice that is worse than what an individual can get by reading some basic investing books and gaining a little experience, and there is no real recourse. And the fact most people in this camp pay handsome sums for the pleasure of ‘going all-in on a long shot thinking it was a low risk way to consistently outperform’ is the most distressing part…

  4. Captain Cheapo says

    I have found the best place to gain an education on finance and investing is by joining an investment club. I am currently in two of them. One of them has managed to beat the S&P 500 for 25 of the past 26 months on a monthly basis. This is no easy feat and there might be some luck involved, but so far, we are not reverting to mean.

  5. Financial Advice for Young Professionals says

    So in the end did you think it was worth it? Imagine how easy it will be to change your next light bulb.

    I had a similar situation with installing new plumbing for a kitchen sink. It would have cost me $100 plus parts to hire Home Depot to do it. But I did it myself, had no idea what I was doing, and finally got it done after 2 days, 2 trips to Home Depot and 2 trips to Ace Hardware. Was it worth it? Hell no! But I did learn how to do it and 6 months later I installed new plumbing for my 2 bathrooms(3 sinks) in just under 2 hours.

    For one time big projects I think it’s usually a good idea to hire a professional, but for changing light bulbs I will always do that myself.

  6. Roger Wohlner says

    Speaking as a financial advisor, you are right. If one takes the time to educate themselves conceivably many folks could be their own financial advisor. Several things that a good advisor can bring to the party are experience dealing with a variety of client situations, perspective that comes with experience, and an objective viewpoint. The last point is critical, it is tough to view your own situation objectively. Your point about cost vs. the value of your time is also critical. Recently talked with a doctor earning over $300k per year about doing a review of his portfolio. He felt that my fee was reasonable but more than he wanted to pay so he decided to do it himself. I have to wonder if the time spent doing this vs. staying current on something in his field or spending time with his young family was worth the savings.

  7. Harry Sit says

    Young Pro – For the money savings, no, it was not worth it. For learning something completely new to me, yes, it was worth it. For those who do this kind of small DIY jobs but don’t understand investments, their time is much better spent on understanding investments. The payoff is so much higher.

  8. schmoe says

    I once had a job that on many occasions, allowed for optional paid overtime. I had considered the possibility that if I ever had a large home improvement task or fix-it job, such as painting the living room, it may be more optimal to work a day of overtime and use that income to pay a professional.

    Investing is a little different. $2500 a year is quite expensive. Think about the compounding costs yearly. It really behooves one to bring themselves up to speed on investment basics. Because of the dangers of poor investment advice, and the seemingly high frequency of it, investment education is probably something everybody should undergo, even those who prefer not to do it themselves.

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