Questions to Ask Your Financial Advisor About Retirement

Capitalstars Investment Advisor

Whether you're just starting to save for retirement, or you've been investing for years, it can be a smart move to turn to a professional for guidance. But before you choose one, here are 10 questions to ask a financial advisor about retirement.

KEY TAKEAWAYS

A financial advisor can make recommendations and provide guidance to help you plan for retirement.
You pay an investment advisor at an hourly rate (fee-only advisors), a fixed annual retainer, or a percentage of your assets.
Make the effort to find the right financial advisor—you could be working with them for years.

Before you decide on a financial advisor, make sure you'll be getting the services you require and the advice you need. The best way to do that is to ask the right questions. If the answers are unsatisfactory or incomplete, you may want to keep looking. Your retirement is far too important to leave to chance.

What do you like about your job?

No matter what type of professional you're looking for, it helps to find someone who likes their job—and who isn't just punching a clock.
Ideally, your financial advisor will enjoy helping people and have a passion for all things finance, whether that's helping you budget, pay down debt, manage healthcare costs, develop tax strategies, build wealth, and ensure you have enough income in retirement.

Which services do you provide to your clients?

Your financial advisor should offer services that will help you solve the problems you may face in retirement. That includes helping you:

Figure out how much you need to retire, and set savings benchmarks to get you there
Pick investments that match your risk tolerance and time horizon
Develop a long-term investment strategy
Rebalance your investment portfolio
Manage your expenses now and in retirement
Make plans for long-term care
Create a favorable tax strategy

What are your qualifications?

In general, you’re looking for someone with advanced financial and retirement-planning education. Designations to consider include Certified Financial Planner (CFP®), Chartered Financial Consultant (ChFC®), and Chartered Life Underwriter (CLU®).

Another credential high on the list is Retirement Income Certified Professional (RICP®), which involves retirement-specific planning training and education. Verification sites such as Designation Check can help you search for a qualified professional, or verify that the certification he or she claims is accurate.


Are you a fiduciary?

"Fiduciary duty" is a legal term that means that one party has the obligation to act in the best interests of the other party. You want your advisor to be pointing you toward investments that are in your best interest—not theirs.

It’s great if the two coincide, but yours should come first. A hint: Fee-only advisors are more likely to assume fiduciary duty than those who work on commissions.

How will I compensate you?

It’s important to know upfront how you’ll compensate a potential retirement advisor. You should ask whether you’ll pay hourly, per transaction, or annually, based on the value of your assets. Other advisors may be compensated through commissions on the products they provide.

This isn't to say you should necessarily avoid someone who charges more. A high-priced advisor may well be worth the fee you pay if the results are valuable to you. Be wary of commission-based compensation, however, as it could mean the advisor will steer you into buying products with higher fees.

The Bottom Line

Asking the right questions and listening carefully to the answers you receive helps you decide if there’s a good match. If you’re part of a couple, both partners should feel comfortable with the financial advisor. Philosophy, fees, qualifications, and more all come into play.

Remember, choosing a retirement advisor is not an easy task. You may have to interview several candidates before you find the right one.