Why use a financial advisor?

I hear a lot of people saying, just invest in index funds. You can DIY it through [insert platform here], no need for an advisor!

But which index funds, in what proportions, and why?

The value that an advisor, specifically an AFA who does financial and investment planning, brings is in connecting your “why” to the “how” using their in-depth knowledge of the financial sector. (Note: I’m only talking about good AFAs here…finding a good one is a whole another challenge. I’ve got a post on how to do that, too.)

The other value is in oversight and management. It’s a lot different having a conversation and then saying sure do it, vs logging in to a web portal. You probably know a couple of folks who would prefer to stay well away from “computery stuff”. This one is really more of a convenience fee, but there’s something to be said for convenience.

And then there’s the insurance and mortgage brokers (can be AFAs, are often RFAs). Whose entire job is to know all the tricky little loopholes of products from different providers, and the criteria they use in assessing applications, and how best to frame your application to the provider to get what you want at the lowest cost to you. And then act as a go-between and advocate on your behalf where necessary. Suffice it to say that these commission-paid brokers provide a valuable service and you really should use them even if you DIY your investments. (Note: I have only professional and non-compensatory relationships with brokers of any sort.)

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