The smartest investment you ever make will be in financial planning for your retirement and unless you’re an expert on investing and tax planning, you’re going to need a financial advisor to help with that.
But how do you ensure that your financial advisor is going to make your retirement savings plan good enough to lead a comfortable life?
Investment management, sadly, has one bad apple, at least, for every one good financial advisor.
That’s why we’ve put together this guide to finding financial planning services that you can rely on and personal financial advisors that deliver the kind of financial plan, you need to enjoy your golden years.
What Kind Of Advisor Should I Hire? A Certified Financial Planner?
Certified financial planners are an excellent option for many people. Certified financial planners often have expertise in retirement and can help you build your retirement nest egg with minimal fuss.
You may also want to consider a trustworthy financial advisor from a slightly different background such as a chartered financial analyst, chartered retirement plans specialist, a retirement income certified professional, or even a chartered retirement planning counselor.
Just make sure they’re a registered investment advisor with the relevant financial industry regulatory authority and they should be able to represent your needs effectively.
You should also think about whether your financial advisor should work on a commission basis, from selling you products to invest in, or if you want fee-only advisors that charge a flat fee for their advice but do not take any commission on the final products you buy.
Some people believe that financial advisors who are on commission shares their risk and thus, want to provide the best possible retirement savings plan and others feel that their interests might be compromised by thoughts of commission and prefer to set the fee with their financial advisors in advance. Either is fine.
Should I Opt For “Fiduciary” Financial Advisors?
Not all financial advisors are bound to put their client’s interests before their own! Yes, that might sound crazy but registered investment advisors are obliged to deliver “fiduciary standard care” which means that they can only work for you and must avoid any conflict of interest. This is a fiduciary financial advisor.
Whereas a brokerage firm has no such obligation. This is pretty shocking when you realize that in a survey of Americans, 48% of them believe that a financial advisor has an obligation to meet the fiduciary standard!
Now, we would note that sometimes this won’t matter. If you’re hiring your financial advisors just to help you set a budget? It shouldn’t matter at all what their interests are. But it is paramount to choose the right financial advisor if you’re looking at building a portfolio for retiring.
Not all investment advisers are created equal and many people who call themselves a “personal financial advisor” may not be trustworthy financial advisors because their own investment portfolio may come before your own.
When seeking investment advice, you should always ensure you work with an advisor who is certified by a financial planning association and whose financial life is not in conflict with your own.
What Should I Expect To Pay Financial Advisors?
It very much depends on what you’re trying to do. Fee-based advisors will charge a fee, either per hour, annually, or based on a specific outcome or on how much money you want them to manage for you.
A human advisor will cost more than online financial advisors, which save on their costs by allocating the same human financial advisor to many different accounts at once.
You may find that a traditional financial advisor expects you to invest a minimum amount through their practice and if you’re brand new to financial products you may not have enough money to pay them for their advice.
Others in the financial planning industry will be more accommodating if you want their advice, particularly if they are paid in commissions.
We would note that even the smallest percentage fee can add up to thousands of dollars over the decades of retirement savings. We would strongly recommend you ask the advisor to break down how much you will pay in fees over the lifetime of your financial product.
What Kind Of Financial Planning Will The Advisor Do?
OK, for this we’re going to assume that you’re engaging an advisor to help you achieve your financial goals rather than a personal financial specialist to look at a single aspect of your future plans.
You can expect your advisor to begin working in your best interest by determining your actual current financial position.
They will need to understand your income, your assets, your debts, your liabilities, and more. They will want to ensure that you can service your obligations and save for your senior years at the same time. Personal finances are complicated things and a good financial consultant is going to want a detailed picture of your current finances to be able to give you the best advice for future wealth management.
Then they will want to delve into how you intend to spend your retirement. You don’t need as much money to stay at home and watch the grandkids as you might to spend your final years on luxury cruises bouncing from interesting destinations to interesting destinations.
This helps them deliver a monthly plan that you need to stick to, in order to meet your goals.
They should also explain tax implications and how you can best minimize taxes. They may also touch on estate planning at this point.
Some advisors will also be able to help you start making investments and others may need to recommend you to other professionals to make those investments.
You Can Choose The Services You Get
If you don’t need all the services that your potential financial advisors offer, you don’t have to use them.
Financial professionals are happy to provide more tailored services for specific outcomes usually for an hourly fee.
How Do I Find A Retirement Advisor That I Can Trust?
The best way to get good advice on personal finance is to ask around your friends and family. What are their experiences, how have their investments fared?
If that’s not feasible, your next best bet is to carefully research online and, in particular, look at any complaints about services and how they were resolved.
You don’t want to put your financial situation at risk, you’re looking to save money for your future. Be discerning and don’t be afraid to get a second opinion if the first doesn’t fit what you think is right.
How Can I Ensure That My Advisor’s Advice Is Correct?
Educate yourself. You may not be a specialist with a financial education but you can read some books on investing, look up people with great financial lives online, etc. and better understand financial affairs and products.
The more you know, the harder it is for anyone to pull the wool over your eyes by accident or design.
Final Thoughts On Retirement Plans
Anyone can enjoy their retirement as long as they plan for it and save for it appropriately, we hope that you’ll use the approach we’ve outlined here to find a financial advisor that can help you live your dreams in your golden years.
Once you’ve sorted out your finances you can start looking at the senior housing options for retirement, check out the safest places to retire in the United States, or even consider retiring in the Philippines.