What to Know Before Hiring a Financial Advisor for Retirement – Forbes Advisor


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When it comes to retirement planning, working with a financial advisor can be beneficial. A retirement financial advisor can help you develop a plan to ensure you have the resources to support yourself in retirement.

However, not all financial advisors are created equal. It’s important to do your research to find a qualified counselor who you feel comfortable working with.

What is a retirement advisor?

A retirement advisor is a financial professional who helps you plan and manage your finances before and during retirement. This is a broad term that can encompass many types of financial professionals, including financial advisors, certified public accountants (CPAs), certified financial planners (CFPs), and investment managers.

Since there are many types of retirement advisors, it’s important to understand what type of advisor you need and what services they can provide before hiring one.

What retirement planning advisors do

A retirement advisor can help you with all aspects of retirement planning, from saving and investing to budgeting and spending.

Retirement advisors can also help you with estate planning and long-term care planning. Some retirement advisors specialize in specific areas, such as investment management or tax planning. Others use a more holistic approach, where they consider a client’s entire financial situation.

In general, a retirement advisor should offer at least one of these services:

Financial planning

Retirement advisors can help you develop a personalized financial plan to meet your retirement goals. This includes saving money, investing money, and managing your debt.

Investment management

Retirement advisors can help you choose the right investments for your retirement portfolio. They can also advise you on how to rebalance your portfolio as you approach retirement.

Tax planning

Pension advisors can help you reduce your taxes payable in retirement. Likewise, advisors can help you plan for your pension income tax and other retirement income.

Estate planning

A good retirement advisor can help you develop a plan for managing your assets after your death. This includes creating a will, designating beneficiaries and creating trusts.

Long term care planning

Retirement advisors can help you plan for the option of long-term care in retirement. For example, an advisor can review various insurance options and develop a plan to pay for long-term care costs.

Related: Find a financial advisor in 3 minutes

Advantages and disadvantages of working with a retirement advisor

Many people choose not to hire a dedicated retirement advisor. But for others, having a second look at their finances can improve the quality of important financial decisions. Before hiring an advisor to help you with your planning, consider some of the pros and cons.

Benefits of working with a retirement advisor

There are several benefits to working with a retirement advisor, including:

  • Peace of mind. Pension advisors can provide personalized advice based on your specific situation. Knowing that you have a plan in place to support yourself in retirement can be very reassuring.
  • Guidance and advice. A retirement advisor can help you build a comprehensive retirement plan and navigate the complex world of securities, insurance and retirement planning in new ways.
  • Motivation to save. Working with a retirement advisor makes it easier to track your goals and measure your progress against those goals.
  • Convenience. A retirement advisor can take care of the finer details of retirement planning so you can focus on saving for retirement and then enjoying it.

Disadvantages of working with a retirement advisor

Working with a retirement advisor also has some potential downsides, including:

  • Cost. Pension advisors generally charge a fee for their services. These fees can be hourly, flat-rate, or percentage-based, depending on the products and services they offer.
  • Lack of control. If you’re used to managing your finances on your own, it can be difficult to hand over control to a retirement advisor. That’s why it’s important that you stay involved in your financial planning, even if you hire an advisor to help you.
  • Conflict of interest. Some pension advisors may be incentivized to sell certain products or services.
  • Dependence on someone else. If you become too dependent on your retirement advisor, you may have a rude awakening if they retire or leave the industry.

How to Choose a Retirement Advisor

Here are some things to keep in mind when choosing a retirement financial advisor:

  1. Determine the type of advice you need. There are two main types of financial advisers: those who give general financial advice and those who specialize in a certain aspect of retirement planning. If you’re looking for help in a particular area of ​​your finances, it’s important to find an advisor who specializes in that area.
  2. Understand the advisor’s investment philosophy. Before hiring an advisor, make sure their communication style is approachable and will result in clear, actionable feedback.
  3. Ask about credentials and experience. When meeting with potential advisors, ask about their credentials and experience. Retirement planning is a complex subject, so you want to make sure you’re working with someone who knows what they’re doing and has the appropriate licenses or certifications for their area of ​​interest.
  4. Find out about fees. Most financial advisors charge a fee for their services. These fees can be charged by the hour, as a percentage of assets under management (AUM), or as a flat rate. Find out the fees ahead of time so there are no surprises down the road.
  5. Get references. If you know someone who has worked with a financial advisor for retirement, ask them to recommend you. This can be a great way to find an advisor you can trust whose guidance matches your needs.
  6. Interview several advisors. It is important to research several options before choosing a financial advisor. This gives you a chance to compare credentials, experience, fees, and other factors. It’s also a good opportunity to get a feel for each person’s personality and see if they’re someone you can work with long term.

Related: Find a financial advisor in 3 minutes

Need a retirement advisor?

If you are approaching retirement or are already retired, you may be wondering if you need a retirement advisor. Several factors should be considered when deciding whether or not to hire an advisor, such as:

  • The complexity of your financial situation
  • Whether you have a pension or other retirement income
  • Whether you own or rent
  • Any unpaid debt
  • Your comfort and confidence in managing your own investments

Depending on these and other circumstances, you may benefit from the services of a dedicated retirement advisor.

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