What does a financial advisor know that I do not?

Hiring a financial advisor is a personal choice. And it’s not something you automatically have to do.

But before you write off the idea, it’s important to understand what a financial advisor can do for you. And that’s the question posed in this Reddit post.

Here, we have someone who’s already investing their money, albeit in ETFs with a smattering of stocks. They’ve put in the time to get educated on how invest, and they’re pretty confident that they can manage their own portfolio.

Because of this, they’re wondering what a financial advisor might know that they don’t. And here’s a short list.

They know about diversification

You’re probably aware that it’s important to maintain a diverse mix of assets within your portfolio. But your choices may be broader than you’d think.

A financial advisor may be familiar with assets you don’t know about. They may be able to help you branch out even more in your portfolio to both maximize gains and protect yourself from losses during periods of market turbulence.

They understand tax strategies

A financial advisor is not the same as an accountant or CPA. But they’re commonly well-versed in tax strategies, particularly in the context of saving and investing.

To be clear, your financial advisor should not file your tax return for you. But with their help, the numbers on your next tax return could end up looking far more favorable.

They know how to control their emotions

The stock market is prone to volatility. There’s no getting around that. But it can be difficult to sit back and watch your portfolio lose value.

One thing financial advisors know how to do is stay calm and not react to stock market events. If you manage your portfolio on your own, you might make rash moves that cause you to lock in losses during market downturns. But with a financial advisor overseeing your money, you may be spared those losses, as well as some of the emotional turmoil.

They know what financial protection you need

A financial advisor doesn’t only invest your money. They can also advise you on the protections you might need at various stages of life.

For example, if you’re newly married or having kids, they may suggest that you buy life insurance and help you navigate your options. If you become self-employed, they may suggest disability insurance. And as you get closer to retirement, they may recommend long-term care insurance.

All told, financial advisors go through a lot of education and training to do their jobs. So even if you know a lot about investing, don’t assume there’s nothing a professional can’t help you with. And if you’re still on the fence, meet with one and learn more.

The worst that’ll happen is that you decide a financial advisor isn’t for you. But chances are, once you see what services a financial advisor has to offer, you’ll be inclined to give one a try, even if you’re already in the process of managing a portfolio you put together without any help.