How to Find a Financial Adviser for Retirement Planning

Coming up with a perfect retirement plan on your own is challenging. Dreamstime/TCA

By Adam Shell From Kiplinger’s Personal Finance

Acing all the key components of retirement planning is akin to getting a perfect score on the SAT college entrance exam. It’s not impossible. But for most people, it’s a long shot. And just as a prospective college student may seek help preparing for the SAT, it often makes financial sense for everyday Joe and Jane, 401(k) plan savers to seek a financial adviser to help them map out a retirement strategy.

Even 401(k) do-it-yourselfers who did just fine during the nest-egg accumulation stage realize that there’s a lot more complexity in the so-called “distribution phase” when work paychecks stop and paying the monthly bills relies on the retiree’s own assets and retirement plan. It’s not easy for a DIYer to figure out how much income they’ll need for retirement. Key questions may seem straightforward but may quickly get complicated. For example: what funds should I invest in; how should I divvy up assets between stocks and bonds; when should I take Social Security; how should I manage required minimum distributions (RMDs); what financial accounts should I withdraw money from to save on taxes; and should I convert a traditional IRA to a Roth IRA?

That’s a mouthful. But the laundry list of retirement puzzle pieces is designed to illustrate that coming up with a perfect retirement plan on your own is challenging. For most people, it’s simply too heavy of a lift. When the job of overseeing your retirement-related finances becomes too complex or overwhelming, getting help from a financial adviser could relieve some of the burden.

So, if you’re looking for a financial pro to help you plan for retirement, where do you start?

When It’s Time to Find a Financial Adviser for Retirement

Before beginning your search for a financial adviser, determine what type of help you’re looking for. Are you looking for help to maximize Social Security benefits or tax-efficient withdrawal strategies or building a portfolio or a full-blown retirement financial plan? If you are uncertain about the proper moves or lack the necessary financial knowledge, you might benefit from the help of a professional financial adviser.

The financial adviser, who offers services ranging from retirement planning to portfolio advice, risk management, and tax planning, will assess your financial position holistically and develop a financial plan to help you set and achieve your goals and desired lifestyle in retirement.

How to Find a Financial Adviser

One way to jumpstart your search for a financial adviser who specializes in retirement planning is to ask friends, family members, and professional contacts for referrals. Getting recommendations from people you trust, especially your accountant, attorney, and other so-called “centers of influence,” can get the ball moving.

Working with a dedicated adviser focused on retirement who has the capability to use algorithms that can run thousands of retirement outcomes in good and bad market environments can help you answer key questions, such as: Do I have enough money saved to retire? What are the odds that I will run out of money? How much money can I withdraw from my retirement accounts each year? What’s the optimal age for you and your spouse to take Social Security?

Another good option, especially if you already have a relationship with an investment company or brokerage, such as Fidelity Investments, Charles Schwab, Vanguard, or T. Rowe Price, to name a few, is to investigate the relatively low-cost advisory options, retirement planning solutions, and investment options these well-known firms offer. These services typically range from digital advice to a more traditional advisory relationship that includes your own dedicated adviser. In fact, many financial firms, including Schwab and Fidelity, have an adviser search tool on their websites.

Tapping the resources of industry groups representing financial advisers and financial planners is another outreach tool to consider. For example, the National Association of Personal Financial Advisers (NAPFA) helps you initiate contact in just a few clicks. Similarly, the Certified Financial Planner Board offers a search tool to find professionals who have earned the certified financial planner designation.

No matter their credentials, ensure you check their professional background, Fidelity Investments advises. “That means treating them like you would any other person you were considering hiring for a job: by looking at their resume or LinkedIn as well as asking for references,” Fidelity noted in a blog post. You can also run a free background check using the Securities and Exchange Commission’s Investment Adviser Public Disclosure database or FINRA’s BrokerCheck system.

How Much Do Financial Advisers Charge?

The cost of a financial adviser depends on how the financial professional charges for their services. Here are the common pricing structures:

Assets Under Management

Often, financial advisers charge a percentage based on assets under management—or how much of your money they manage. The industry median charge is 1 percent (meaning half charge less and half charge more), according to Fidelity. So, if a financial adviser is managing $500,000 of your money and charges 1 percent of assets under management, their services would cost you $5,000 per year. But it’s possible to get advice for less due to the competitive nature of the business. So, shop around and compare the costs for advice based on assets under management.

Hourly

Some charge by the hour, not how much you have sitting in your account. Rates range from $200 to $400, according to financial website NerdWallet. Going the hourly rate route is a good option if you just want to set up, say, a basic retirement savings plan, or you want an adviser to analyze the holdings and asset allocation in your 401(k) to see how much income that will generate, as well as let you know if you’re on track for retirement or whether any tweaks to your portfolio are necessary to reach your goals.

Flat Fee

Some financial advisers charge a set fee based on the work that’s being done. This pay structure is akin to an à la carte menu at a restaurant, where each menu item you select comes with its own charge. A financial adviser, for example, may quote you a set one-time fee to create a comprehensive financial plan for you.

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The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.