A great financial advisor is worth their weight in gold. However, not every financial advisor specializes in retirement-related issues, and that’s where retirement advisors come in. A retirement advisor is a financial professional who can help you plan for and manage your retirement. Whether you’re late to retirement planning or want another set of eyes to check out your current plan, there’s no one quite as capable as a great retirement advisor.
Here, we cover how you can know you’re working with someone who will put your needs and goals above all else as you plan for retirement.
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Check out their fiduciary responsibility
When a person is a fiduciary, they are legally required to act in your best interest. In other words, they can’t sell you an investment because they will earn a commission. Everything they do within the scope of advising must be to benefit you in the long run. When seeking a fiduciary, look for a registered investment advisor (RIA). RIAs are registered with the Securities and Exchange Commission or state regulators and are held to fiduciary standards.
Assess their experience
Choose someone with an extensive track record in retirement planning, particularly if you have complex financial needs. While it’s true that every financial advisor must start somewhere, you don’t want a newbie helping you develop a proven retirement plan.
Schedule a consultation
Once you find someone you believe may be a good fit, schedule a consultation to ensure their approach to retirement planning aligns with your retirement goals and the risks you’re willing to take.
Look at their communication style
Simply put, some people don’t gel. You’re on the right track if the retirement advisor you meet with is transparent, responsive to your questions (no matter how many you ask), and able to explain financial concepts in a way that you clearly understand. You might want to keep looking unless you walk away from the meeting and understand everything the advisor told you.
Ask for referrals and read reviews
No one will be as honest with you as friends and family. Ask those you trust for recommendations, and once you have a few names, check online reviews to get outsiders’ views.
Understand their fee structure
Some advisors are fee-only, charging an hourly rate, a flat fee, or a percentage of assets. Others may be commission-based and earn a portion of their income from selling you financial products. According to the National Association of Personal Financial Advisors (NAPFA), fee-only compensation is the most transparent and objective method. It minimizes conflicts and ensures that your retirement advisor acts as a fiduciary.
How a retirement advisor can be a game-changer
Here are some of the ways a well-trained retirement advisor can make a difference:
- Guidance: Working with a retirement advisor means having expert assistance when you need it most.
- Personalization: A strong retirement advisor will help you create a plan that fits your specific goals.
- Risk management: A retirement advisor can help you avoid taking risks outside your comfort zone.
- Long-term planning: A retirement advisor will help you design a plan that will last you throughout retirement.
Given that you could spend decades in retirement, take your time to find the perfect advisor for you. You’ll know you’ve found them when you learn they’re a fiduciary with great experience and an approach to retirement planning that aligns with yours.
