The idea of paying a financial adviser may seem counterproductive. Why not just stuff all your money into a mattress and hope for the best? Do you really need financial advisory for your retirement plans? Let’s just say, it would be wise, with the proper research.
Choosing to get advice on how to manage your savings is only part of the struggle. Finding a competent adviser, one who is right for you and your situation, is another issue altogether. One can never be too careful these days or any day when it comes to trusting people. Dealing with a professional to give financial advise does require a decent amount for reasonable trust. Not just in the person’s integrity, but also in their expertise. This is your life we’re talking about, your nest egg. And all it takes is one bad decision to put you into financial ruin if you don’t have a solid plan.
What is a Solid Plan?
That depends on what’s important to you. We could ask the question “Why not just invest in mutuals funds?” You could. But “which ones should you choose” becomes the next question. Even if you do your research, are you confident in your findings? Sometimes, we need a professional to affirm our results. In fact, it’s strongly advised, even by other retirees who’ve tried to make such decisions alone.
Keep it Simple
If you’re worried about affordability, you have to keep it simple. Working with an advisor doesn’t have to be ongoing. Just be specific in your needs. The number one way to avoid being taken advantage of – or, less nefariously – charged for services & products you don’t really need, you must have a clear idea of what you’re looking for. That way, you remain in charge of the relationship with your potential adviser. They work for you, not the other way around.
When you find an advisor you’re willing to work with, don’t hesitate to ask questions. A good and competent one would want you to. There’s nothing better than having a client who trusts you – and having an advisor you feel you can trust. Make them earn your trust with questions like the following:
1. How do you make money? How much do you charge?
Advisers typically charge a fee and/or collect commissions from the products and services they sell. You’re going to need a clear understanding of how much money this arrangement is going to cost you up front and on an on-going basis.
2. What are your credentials?
Not only do you need to know what their credentials are, but you’ll also need to know which credentials are best suited for your needs. For example, since we’re dealing with retirement, you will want your advisor to hold a CFP certification (Certified Financial Planner).
3. Are you a fiduciary?
What you don’t want is a conflict of interest, which is the problem with working with a nonfiduciary. Reason being, they are incentivized to “recommend” certain products to make their commission. It benefits the fiduciaries to act in your best interest. Fiduciaries are your friends.
4. Who are your usual clients?
You’re obviously going to want someone who’s familiar with your needs and situation. Make sure they’re the right fit, experience-wise.
These are but a few questions you should ask your potential advisor. The main goal here is to put everything out on the table. Make sure you have a full grasp and understanding on the costs, how you will be charged, and whether this person will work to your best interest and not just for the buck. This is a business after all, and knowing their monetary structure is the best way to ensure they’re the right advisor for you.
Financial Advisory may be just what you need to complete the puzzle of devising your retirement plan. You don’t have to do it alone – and you shouldn’t.