These are the 3 big reasons you should use a financial adviser (and picking investments is not one of them)

Not too long ago, well-heeled individuals relied on financial advisers for almost everything from basic expense planning to deciding where to invest their money. Advisors often invested in actively managed mutual funds or separately managed accounts with a supposedly diversified collection of individual stocks.

But recent innovations have made most investment advice proffered by planners or advisers obsolete. Index funds and exchange-traded funds (ETFs) have almost killed active management, while target-date retirement funds provide a set-it-and-forget-it “fund of funds” that automatically rebalances as it gets closer to its target date. Robo advisers provide low-cost, high-tech portfolio management.

Target-date funds and robo advisers are good enough for the vast majority of people who want to invest for retirement but are either too lazy to keep on top of their money or just don’t know what they’re doing. Better a target fund than bitcoin or trendy cannabis stocks, I say.

Read: Target-date funds are more expensive and less effective than this simple investment plan

So, where does that leave financial advisers? And how can individuals get the most out of them?

I spoke with Steve Craffen, partner and senior wealth manager at Stonegate Wealth Management, based in Oakland, N.J. He also is the board chair for the National Association of Personal Financial Advisors (NAPFA), the leading professional association representing fee-only financial advisers—the only kind you should ever go near.

Read: Are you overpaying your financial adviser?

His firm manages portfolios of low-cost ETFs for clients, but says the areas in which clients want and need the most advice include:

1. When to take Social Security benefits. For years, personal finance magazines and websites have advised people to wait until 70 to claim Social Security retirement benefits. After all, just by waiting, you’re locking in annual 8% increases in the benefits you earn. But this column has pointed out that fewer than 3% of Social Security recipients start collecting at 70, while three-quarters begin before they reach full retirement age of 66 or 67. Why? Mostly because they just can’t afford to wait.

Planners, says Craffen, factor in your current health and your spouse’s situation—big differences in age or income can change the most advantageous timing of withdrawals—as well as your overall tax and financial situation to craft an optimal Social Security claiming strategy .”We use some pretty specialized software to help us do the various trade-offs,” Craffen explained, “and life expectancy is one, by the way.” Even the best adviser can’t predict that, of course.

Read: I tested 2 free Social Security retirement calculators, and here’s what I found

2. Which funds to use for retirement and when to tap into them. Again, the conventional wisdom is to spend down non-retirement assets (which for the most part are not taxable upon withdrawal) until after you turn 70 ½, when you must take required minimum distributions (RMDs) from 401(k)s and conventional IRAs.

Again, nice work if you can get it: 42% of baby boomers have absolutely nothing saved for retirement, according to a 2018 study by the Insured Retirement Institute, which calls itself a trade association “for the retirement income industry.”

Read: Get real about retirement: 8 common ways people fool themselves

Depending on an individual’s current and future tax situation, Craffen says it might make sense for some people to withdraw money from their retirement accounts and pay the taxes on them (assuming they’re at least 59 ½ so they can avoid stiff penalties for early withdrawals — with this one exception) and use the taxable accounts later for things like…

3. Paying for long-term care. “That’s the big expense. typically it’s the one that’s not usually covered by any policy other than the long-term care policy,” says Craffen.

Read: Health care will cost $280,000 in retirement — and that doesn’t include this huge expense

Unfortunately, long-term care premiums have grown dramatically, and several major insurers have exited the business or stopped writing new policies because payouts have been much larger and fewer people have dropped coverage than they originally projected. But Craffen adds that planners can help clients find alternatives like term-life insurance policies with long-term care riders, which tap into the policies’ death benefit to cover long-term care expenses.

There are other issues in which financial advisers can add value, including whether to take a reverse mortgage and whether to buy annuities and which ones to buy. But the important thing to look for is the fee. Financial planners may bill by the hour, charge for a one-time plan, offer “subscriptions” for continuing advice, or charge a percentage of the assets they manage. Vanguard, Schwab, and Fidelity all offer financial planning services to clients at reasonable costs.

Read: What to know about the new jumbo reverse mortgages

So, buy a diversified mix of low-cost index funds or ETFs or a target-date fund for your investments and go to a reasonably priced financial planner or adviser (or, if necessary, a lawyer or accountant) for everything else. Sounds pretty simple, and it is.

Howard R. Gold is a columnist for MarketWatch. Follow him on Twitter @howardrgold.