What To Know Before Hiring A Retirement Financial Advisor (2024)

When it comes to retirement planning, working with a financial advisor can be beneficial. A retirement financial advisor can help you map out a plan to ensure that you have the resources needed to support yourself during retirement.

However, not all financial advisors are created equal. It’s important to do your research to find an advisor who is qualified and whom you feel comfortable working with.

What Is a Retirement Financial Advisor?

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

Because 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 you hire 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 also can 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 comprehensive 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 also can provide guidance on how to rebalance your portfolio as you approach retirement.

Tax Planning

Retirement advisors can help you minimize your tax liability in retirement. Likewise, advisors can help you plan for income taxes on your pension and other retirement income.

Estate Planning

A good retirement advisor can help you develop a plan to manage your assets after you die. This includes creating a will, naming beneficiaries and setting up trusts.

Long-term Care Planning

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

Related: Find A Financial Advisor In 3 minutes

Pros and Cons of Working With a Retirement Advisor

Many people elect not to use a dedicated retirement advisor. But for others, having a second set of eyes on their finances can improve the quality of important financial decisions. Before you hire an advisor to help with your planning, consider some of the advantages and drawbacks.

Advantages of a Retirement Advisor

• Peace of mind. Retirement advisors can provide personalized advice based on your unique circ*mstances. Knowing that you have a plan in place to support yourself during retirement can be very reassuring.
• Guidance and advice. A retirement advisor can help you develop a comprehensive retirement plan and otherwise navigate the complex world of securities, insurance and retirement planning.
• Motivation to save. Working with a retirement advisor makes it easier to track your goals and measure your progress against those objectives.
• Convenience. A retirement advisor can take care of the nitty-gritty details of retirement planning so you can focus on saving for—and then enjoying—your retirement.

Disadvantages of a Retirement Advisor

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

How to Choose a Financial Advisor for Retirement

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

1. Determine what type of advice you need. There are two main types of financial advisors: those who give general financial advice and those who specialize in a certain aspect of retirement planning. If you’re looking for help with 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 and actionable feedback.
3. Ask about credentials and experience. When you’re meeting with potential advisors, ask about their credentials and experience. Retirement planning is a complex topic, so you want to make sure that you’re working with someone who knows what they’re doing and holds appropriate licenses or certifications for their area of focus.
4. Inquire about fees. Most financial advisors charge fees for their services. These fees may be charged hourly, as a percentage of assets under management (AUM) or as a flat rate. Ask about fees upfront so there are no surprises down the road.
5. Get referrals. If you know someone who has worked with a retirement financial advisor in the past, ask them for referrals. This can be a great way to find an advisor you can trust and whose focus aligns with your needs.
6. Interview multiple advisors. It’s important to interview multiple 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

What to Ask a Financial Advisor about Retirement

1. What is the ideal age to start planning for retirement?
2. How much money should I aim to save for retirement?
3. What are the different retirement savings vehicles available to me, and which ones would be most suitable for my situation?
4. How can I maximize my employer-sponsored retirement plans, such as a 401(k) or a pension plan?
5. What strategies can I employ to reduce taxes on my retirement savings and income?
6. How should I allocate my investments within my retirement portfolio to balance risk and potential returns?
7. What are some potential risks or obstacles that I should be aware of when planning for retirement?
8. How can I estimate my future expenses in retirement and ensure that my savings will be sufficient?
9. What factors should I consider when deciding when to start receiving Social Security benefits?
10. How can I plan for healthcare costs in retirement, including long-term care expenses?

Do You Need a Retirement Advisor?

If you’re nearing retirement or already retired, you may be wondering if you need a retirement advisor. There are several factors to consider 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 your home or rent
• Any outstanding debt
• Your comfort and confidence in managing your own investments

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