While the majority of financial advisors manage their own stock and retirement portfolios, others seek the guidance of investment managers to buy and sell assets such as commodities or options.

The advantage of delegating a portion of their funds to another advisor means increasing their viewpoint to the markets, especially for alternative investments, said C.J. Brott, founder of Capital Ideas, a registered investment advisor in Dallas who manages his own portfolio, but has hired other financial advisors in the past.

"This helps an advisor broaden their viewpoint, especially if they hire someone who has expertise in bonds, commodities or private equity," he said. "Bond or private equity guys look at the markets in a different way."

The key is determining if the advisor only has a portion of his portfolio managed by another manager and wants the advantage of statistical analysis for a specific market such as real estate or municipal bonds, Brott said. If an advisor had 100 clients and all of them wanted to buy or sell their holdings in reaction to a market event or movement, it is easy for him to be more influenced by their own holdings.

"It helps shield the advisor from the extreme mental pressure of a panicky client base to either buy or sell his/her own or other clients holdings at the wrong times, typically at market extremes," he said. "You know that he's not under pressure to give advice against what his true beliefs are."

The reason some financial advisors seek outside investment manager for guidance on handling their own money is that they can provide a more objective viewpoint, especially when the market is volatile, said David Twibell, president of Custom Portfolio Group, an Englewood, Colo.-based financial planning firm.

"It's not surprising since investment advisors aren't necessarily immune to making rash decisions in times of extreme market conditions," he said. "Most financial advisors know firsthand how costly it can be to let emotional decisions dictate your investment strategy. Part of the value of working with an advisor is that they can help clients weather periods of extreme volatility and exuberance without getting swept away in the emotional riptides."

Why Your Judgement Should Count

Some clients could view this strategy as a negative one since it's harder to them to "trust your judgement during times of market stress if you don't trust your yourself to handle your own money wisely during these periods," said Twibell.

"Sure, in theory it's a little harder when you're talking about your own money versus someone else's money, but if you're acting as a fiduciary for your clients, whether legally, ethically, or both, the decisions you make for them shouldn't necessarily be any different than those you make for yourself," he said. "Personally, I'd have trouble working with a financial advisor that didn't trust their own judgement enough to manage their personal and family investments on their own."

The strategy of the outside investment manager could also be too conservative at a time when the financial advisor believes the opposite.

"I can be very aggressive and buy stocks for myself that are not suitable for client accounts," said Brott.

Managers should want to "win" while being disciplined in their approach, said Patrick Morris, CEO of New York-based HAGIN Investment Management.

"I want a competitive manager with a desire to come in first place every year," he said. "I don't want my value fund becoming a blend or growth fund, but I also don't want my fundamental managers becoming quants and tuning 300 stock portfolios."

When financial advisors manage their own portfolios, they often gain insight on their investment choices for their clients, said Rick Tonge, CEO of Tonge Investments in Oakland, Maine, and a portfolio manager with Covestor, the online investing company.

"I invest one way and have 100% of my investable assets in that process," he said. "I prefer to have my money at the same risk and be in the same position as the clients. This also gives me the client perspective, particularly when it comes to losing money as I do not want to lose either. It becomes very personal very quickly."

Editors' pick: Originally published April 28.