Self-managing your investments can be perilous to the long-term health of your portfolio.

Most of us have heard the old adage that an overwhelming percentage of drivers consider themselves above average (a mathematical impossibility). Known as “illusory superiority” in social psychology, this phenomenon has been taught to high school and college students for decades, and to this day remains an amusing example of human overconfidence.

Unfortunately for us humans, that overconfidence extends to a wide range of activities, not least of which are investment decisions. Many investors choose to manage their own investments, and a small minority do just fine. Sadly, the universe of self-managers is much, much larger than that small minority, and most don’t do very well on their own. They fall prey to any number of mistakes, and with significant costs: poor long-term returns, unnecessary risk, diminished spending ability in retirement, and even reduced quality of life from stress.

If you’re currently self-managing your investments, consider the following.

1. You’re Underperforming the Market

According to DALBAR, a research firm specializing in customer performance, most individual investors dramatically trail the market. In their 22nd Annual Quantitative Analysis of Investor Behavior, DALBAR examined the behavior of mutual fund investors over the 30-year period ended December 2015. This period included such notable events as the 1987 crash, the drop at the turn of the millennium, the stock market crash of 2008, and the ensuing recovery.

The findings aren’t pretty. The annualized return for the S&P 500 over that time period was 10.35%. The annualized return for the average equity investor? Just 3.66%! Fixed income investors didn’t do any better – they managed a 0.59% annualized return, compared to a 6.73% annualized return for the Barclays Aggregate Bond Index. In both cases, DALBAR found that “…investor behavior is the number one cause” of underperformance. They further explain, “The data shows that when investors react, they generally make the wrong decision.”

Be cognizant that if you self-manage in an attempt to outperform the market, the odds are stacked heavily against you.

2. Your Financial Well-Being Is More Than Just Your Investments

Setting aside the above and assuming you’re part of the small minority that can keep up with the market, don’t forget there’s more to your financial life than just your investments. Even with strong portfolio performance and a good asset allocation , there are plenty of chances to go wrong.

Consider taxes. By failing to place assets into the optimal account types, you could end up giving more back to Uncle Sam or your state than you need to. Dividends, interest income, and capital gains are all treated differently depending on where they’re placed, so a sound strategy is key. Likewise, your tax bill can vary greatly based on your net realized gains for the year – the difference between your realized gains and losses. Poor timing of sales can cause you to miss out on significant tax-saving opportunities, once again leaving you with less of your hard-earned profits.

The same is true of many other financial planning considerations. Take insurance. Buy too little and an unexpected catastrophe could wipe you out. Buy too much, and you steadily bleed precious premiums that could be working towards your retirement. Proper estate planning also entails a veritable rat’s nest of hazards. By assigning a bad trustee or executor, forgetting to assign appropriate beneficiaries, or failing to understand estate taxation, you could leave your heirs in a position starkly different from what you intended or expected.

And what about your retirement accounts? Do you have a tax-optimized withdrawal strategy for your IRA or 401k? Taking wealth management into your own hands extends far beyond pure investment strategy.

3. You Can’t Be On the Clock 24/7

Overseeing a comprehensive financial strategy takes time. That’s a big drawback if you enjoy family, friends, or hobbies – not to mention interruptions like vacations or the occasional flu. Most people simply don’t have the time, inclination, or training to properly manage a complex investment portfolio. And, the later in life, and the larger the portfolio, the more risk you assume in managing on your own.

To play devil’s advocate, it’s possible you immensely enjoy investing and it doesn’t interfere with your other priorities. Fair enough. But what happens if you suddenly become incapacitated or lose access to your account, even if only for a short time? Illness, accidents, family emergencies, and frozen computers happen. Often! In business, there is a concept known as key person risk, and a common countermeasure is to create purposeful redundancy in subject matter expertise. As a self-manager, it’s unlikely you have trusted surrogates who could step in and manage your portfolio if you were unable to. That’s a big risk, and also a common element in the fourth and final consideration.

4. At Some Point, You Will Need a Contingency Plan

Too often, self-managers spend a lifetime painstakingly tending to their investments, only to eventually turn it over to a spouse or children who have no idea what to do. Without a solid plan for the inevitable handoff, it doesn’t take long for poor decisions, inactivity, or unscrupulous financial salespeople to eviscerate what took so long to build.

That’s a real tragedy, and it happens every day. The good news is that it is easily prevented – just start early. Even if you’re great at investing (which very few are), have a thorough understanding of estate and tax planning (true for even fewer people), and have the time and interest to manage your investments (fewer still), you can and should still plan for a transition. Find an investment professional whose philosophy matches your own, and test them out with part of your portfolio. If they end up not being a fit, you have plenty of time to switch. If you like what they do, you can work with them to build a financial plan that both honors the hard work you’ve contributed and leaves the portfolio in good hands when you’re gone.

Our Take

With the rise of robo-advisors and online investment tools, people are feeling more empowered to take investment management into their own hands. While there is a small minority of people who are relatively successful as self-managers, the majority negatively impact their overall financial portfolio and underperform the market. The right professional financial advisor can support your investment objectives and work with you on every facet of your financial life.