If you're wondering how to find a financial advisor for retirement planning, this guide will help you get started.
You're likely looking for ways to pursue a confident future. You want to understand how a financial advisor can help you work towards your retirement goals, their services, and the costs involved. Most importantly, you need a trustworthy advisor who can create a personalized plan tailored to your unique financial situation.
In this blog, we'll cover everything you need to know to find the right financial advisor for your retirement planning.
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How to Find a Financial Advisor for Retirement
To find an advisor that will help you prepare for retirement, start by assessing your goals and financial situation.
What is important to you? What are you looking for in an advisor?
Make sure you’re clear about your goals and values. Then, start the research process.
Research potential advisors by investigating their specialties, credentials, experience, and client reviews.
Also, consider their philosophy and whether they pride themselves on providing excellent customer service and support.
Do a search online and ask for references from your friends and colleagues. Then, meet with a few advisors to see if they can help you. It’s often best to seek the guidance of a fiduciary financial advisor as they are legally obligated to provide you with the best advice and cannot sell you overpriced high-commission products.
What Is a Retirement Planner?
A retirement planner is a financial professional who helps you prepare for your post-working years.
They focus on creating a roadmap tailored to your retirement goals, ensuring you have enough savings and investments to maintain your desired lifestyle. Retirement planners consider factors such as your current assets, projected expenses, and potential risks.
They also help you navigate decisions like when to retire, how to maximize social security benefits, and how to manage your retirement accounts. Think of them as a guide, helping you make informed decisions to pursue a confident retirement.
Benefits of Working with a Retirement Planner
Working with a retirement planner offers personalized guidance for your future.
They bring knowledge to complex issues like tax planning, investment strategies, and withdrawal plans. For example, a retirement planner can help you understand the tax implications of different retirement accounts, recommend asset allocation to match your risk tolerance and create a plan for sustainable income in retirement.
It's important to feel confident as you head into retirement. A plan tailored to your needs and goals will likely give you the confidence you need to pursue some of your bigger life goals without worrying about the financial implications. You'll have a guide who can assist you in making big financial decisions.
Do You Need a Financial Advisor?
Determining whether you need a financial advisor depends on your situation and goals.
If you feel overwhelmed by the complexities of retirement planning or lack the time and expertise to manage it yourself, an advisor could be valuable. Consider factors like your current financial knowledge, the size and complexity of your assets, and your comfort level with making investment decisions.
Working with an advisor is advisable if your retirement goals involve detailed planning, such as maximizing your investments, managing risks, and creating a sustainable income stream.
On the other hand, if your finances are straightforward and you feel confident in managing them, you might opt for a more DIY approach.
If you have $1M or more in investable assets, it's typically wise to seek the guidance of a wealth management team who can help you with every aspect of your financial life. The greater your assets, the more complex your financial planning becomes and the more value you get from your wealth management team.
How to Choose a Financial Advisor for Retirement Planning
1. Assess Your Retirement Planning Needs
Identify your specific retirement goals and financial situation to determine the type of advisor you need.
2. Research Potential Advisors
Gather information about various advisors, including their specialties, services offered, and client reviews.
3. Check Credentials and Qualifications
Ensure the advisor is well-equipped for retirement planning by looking for key qualifications such as:
Certified Financial Planner (CFP)
Chartered Financial Consultant (ChFC)
Retirement Income Certified Professional (RICP)
Accredited Investment Fiduciary (AIF)
4. Evaluate Experience and Expertise
Assess the advisor’s experience in retirement planning and managing clients with similar financial situations.
5. Understand the Advisor’s Approach
Review their investment philosophy, planning process, and how they customize strategies to meet individual needs.
6. Consider Fee Structures
Compare different fee models (e.g., fee-only, commission-based) and decide which aligns with your financial preferences.
7. Verify Fiduciary Status
Ensure the advisor acts in a fiduciary capacity, meaning they are legally obligated to act in your best interest.
8. Schedule Initial Consultations
Meet with potential advisors to discuss your retirement goals, ask questions, and assess their communication style and rapport.
9. Check References and Reviews
Seek feedback from current or past clients and review online ratings to understand the advisor’s reputation and client satisfaction.
10. Evaluate Ongoing Support and Services
Determine what ongoing support the advisor offers, including regular reviews, updates, and adjustments to your retirement plan.
What to Ask a Financial Advisor About Retirement
Here are key questions to ask potential retirement advisors during consultations:
Are you a fiduciary, and will you always act in my best interest?
What is your specific experience and expertise in retirement planning?
How do you approach investment strategies for retirement?
Can you explain your fee structure and any potential additional costs?
How will you help me create a sustainable income stream in retirement?
What strategies do you use to minimize taxes on my retirement income?
How often will we review and adjust my retirement plan?
Can you provide references or examples of how you've helped other clients with similar retirement goals?
How do you incorporate changes in the market or economy into my retirement plan?
Different Types of Financial Advisors and Planners
There are several types of financial advisors, each with a unique focus and expertise. Here’s a breakdown of the most common ones:
Certified Financial Planner (CFP)
These advisors are certified professionals who offer comprehensive financial planning covering retirement, investments, taxes, and estate planning.
Investment Advisor
Focuses on managing your investment portfolio, seeking to grow your wealth through various assets like stocks, bonds, and mutual funds.
Wealth Manager
Caters to high-net-worth individuals, offering personalized financial services, including investment management, estate planning, and tax strategies.
Robo-Advisors
Automated, algorithm-driven platforms that provide low-cost investment management are ideal for those who prefer a digital, hands-off approach.
Retirement Planner
Specializes in helping clients prepare for retirement, focusing on savings strategies, income planning, and optimizing retirement accounts.
How Do Retirement Advisors Charge?
Retirement advisors can use different fee structures, so it’s important to understand what you might pay.
Fee-Only
These advisors charge a flat fee, hourly rate, or a percentage of assets under management (AUM).
For example, a common AUM fee is around 1% per year, which aligns the advisor’s compensation with the growth of your portfolio. Let's say that you have a portfolio of $1M, if your advisor charges 1% of AUM, you would pay $10,000 per year for your advisor's services.
Commission-Based
These advisors earn commissions by selling financial products like mutual funds, insurance policies, or annuities.
This structure can sometimes lead to conflicts of interest if advisors are incentivized to recommend products that may not be in your best interest.
Fee-Based
A combination of both fee-only and commission-based models.
These advisors charge fees for planning services and can also earn commissions on products they sell.
Retainer or Subscription
Some advisors offer a retainer or subscription model, where you pay a fixed monthly or annual fee for ongoing advice and support.
Common Questions about Retirement Planning
What is a fiduciary financial advisor?
A fiduciary financial advisor is legally obligated to act in your best interest, putting your needs above their own.
This means they must provide independent, professional advice and avoid conflicts of interest, ensuring that their recommendations are solely to benefit your financial well-being.
What is the difference between a financial advisor and a retirement planner?
A financial advisor offers general financial guidance, including investments, budgeting, and insurance. They also manage your investments for you.
A retirement planner specializes in preparing clients for retirement, focusing on savings strategies, income planning, and managing retirement accounts to work towards a secure financial future. When you work with a wealth management team, you get the benefit of financial planning, retirement planning, estate planning, and wealth management.
Are Certified Financial Planners fiduciaries?
Certified Financial Planners (CFPs) are held to a fiduciary standard, meaning they are required to act in the best interests of their clients.
This includes providing the best possible advice, disclosing conflicts of interest, and maintaining a high level of ethical and professional standards.
What is a Registered Investment Advisor?
A Registered Investment Advisor (RIA) is a firm or individual registered with the SEC or state authorities.
RIAs provide investment advice and are held to a fiduciary standard, ensuring they act in the best interests of their clients when managing their investments.
Are all financial planners fiduciaries?
Not all financial planners are fiduciaries.
Some may follow a "suitability" standard, recommending products that are suitable for the client but not necessarily the best option. It’s important to ask if a planner adheres to the fiduciary standard before engaging in their services.
What is a retirement advisor?
A retirement advisor helps clients prepare for retirement by creating personalized plans.
They focus on building and managing retirement savings, planning income streams, and navigating social security and tax strategies to work towards retiring confidently. The term "retirement advisor" is not an official industry term or designation.
Is "retirement financial advisor" a commonly used term in the financial services industry?
"Retirement financial advisor" is not an official industry term but may be used to describe advisors who specialize in retirement planning.
It effectively communicates the advisor's focus on helping clients plan and manage their finances specifically for retirement.
What is the $1,000-a-month rule for retirement?
The $1,000 a month rule suggests that for every $1,000 of monthly retirement income you want, you need around $240,000 in savings.
This is based on the 4% withdrawal rule, aiming to make your savings last through a 30-year retirement.
What is the average retirement age in the US?
The average retirement age in the U.S. is around 65 for men and 62 for women.
However, this varies based on individual circumstances, career paths, and financial readiness, with many aiming to retire earlier or later.
In terms of retirement savings, how much do I need as I head into retirement?
A common guideline is to aim for 10-12 times your annual income saved by retirement.
For example, if you earn $80,000 annually, you should have $800,000 to $960,000 saved. These savings helps ensure you have enough to cover expenses throughout a potentially long retirement.
How do I know if I need wealth management services as opposed to just financial planning?
Wealth management might be necessary if you have a high net worth and complex financial needs, such as managing multiple investments, estate planning, and tax strategies.
Financial planning focuses on budgeting, saving, and planning for specific goals, while wealth management offers a more holistic, ongoing approach.
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About 360 Financial
360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Headquartered in Minnesota, we serve investors across the US with online and in-person wealth management and financial planning services.