Advisors
Retirement financial advisor: Definition and what they do
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“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Published 2:06 p.m. UTC July 3, 2024
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Key points
- These advisors understand how to manage retirement cash flow.
- They help people transition from an annual salary to living off their assets.
- Retirement advisors examine appropriate investments, Social Security and Medicare planning.
Reaping the rewards of decades in the workforce is what retirement is all about. But as exciting as retirement is, transitioning from making a full-time income to living off your savings and investments can be stressful. The good news is you don’t have to do it alone. A financial advisor can help.
Like many professionals, financial advisors can have areas of expertise. Some focus on people in a particular life stage, such as retirement. If you are in or near retirement, a retirement financial advisor can help you manage your income and assets during your golden years.
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What is a retirement financial advisor?
Retirement financial advisors specialize in helping people transition from earning an annual salary to living off their assets. This involves many moving parts that go well beyond investment management.
A retirement financial advisor understands the technical aspects of managing retirement cash flow, selecting appropriate investments, Social Security, Medicare and long-term care planning. They also “serve as a trusted confidant to help the family develop a meaningful use for their life savings,” says Ian M. Eberle, a Fort Pitt Capital Group financial advisor.
“An experienced retirement financial advisor will have walked alongside hundreds of individual clients in navigating their retirements,” Eberle says.
What do retirement financial advisors do?
A retirement financial advisor shines a light on every element of retirement planning. They help clients set and achieve retirement goals with individualized plans based on income, expenses, investments, risk tolerance and other factors, says Cameron Burskey, senior partner and managing director of retirement security at Cornerstone Financial Services.
Although there isn’t an all-encompassing qualification for retirement financial advisors, they should be well versed in critical areas of retirement planning, including the following:
- Financial planning. This involves helping you build your assets ahead of retirement, manage your debt and strategize retirement distributions.
- Investment management. This involves helping you choose the right investments based on your time horizon and risk tolerance and managing those investments.
- Tax planning. This involves helping you minimize taxes before and during retirement.
- Social Security planning. This involves helping you decide when to start taking Social Security and how this income impacts your overall retirement plan.
- Long-term care planning. This involves helping you identify the services, programs and resources you may need to satisfy your health or personal care needs over an extended period, including insurance options.
- Estate planning. This involves helping you determine how your assets will be protected and passed on to future generations.
Planning your financial future could be among the most important decisions you make. “As most people procrastinate on these very important items, it’s critical to remember they can have a direct impact on your quality of life,” says Steve Azoury, a chartered financial consultant and owner of Azoury Financial.
Pros and cons
Working with a retirement financial advisor can provide a host of benefits. But, like most major life choices, they are accompanied by equally relevant drawbacks.
Before committing to an advisor, evaluate your current situation and weigh the advantages and disadvantages of the partnership.
Pros
Stability
A retirement financial advisor will provide another set of eyes on your retirement plans. This can give you a sense of security that may be lacking if you manage your retirement plan alone. It also relieves the pressure of monitoring your progress toward your retirement goals. As your situation changes, an advisor will help you reformulate your plan.
Personalized advice
Many paths present themselves on the way to retirement. Knowing which one to choose can be hard, as there is no one-size-fits-all plan. A retirement financial advisor offers personalized guidance that no Google search can provide.
More free time
Time is money, as they say. One benefit of working with a retirement financial advisor is that you can get more of both time and money. They will research and recommend investments and products and monitor your retirement plan, potentially saving you countless hours behind a computer screen.
Cons
Cost
Hiring a retirement financial advisor comes with a price tag, and it can be hefty. Advisors can charge in several ways, including flat fees, hourly fees or a percentage of assets under management. Be sure to understand what your all-in cost will be before committing. You must have enough assets to justify it.
Conflict of interest
Advisors are sometimes tasked with meeting quotas to sell a particular suite of financial products. These advisors may also earn commissions that incentivize them to put clients in specific products or investments. To avoid such conflicts of interest, work with a fiduciary. Fiduciaries generally cannot earn commissions and are ethically and legally required to put their clients’ interests ahead of their own.
Dependence
As great as it is to have someone to lean on while planning for retirement, that person may decide to retire themselves. If this happens, your retirement financial advisor will transition you to someone else at their firm, but there’s no guarantee you’ll get along.
How to find and choose a retirement financial advisor
Your social network is an easy place to begin your search for a retirement financial advisor. Ask friends and family if they work with an advisor and can recommend them. Other professionals you work with, such as attorneys, insurance agents or accountants, may also provide referrals.
If your peers don’t come through with recommendations, there’s always good old Google. Conducting a search for a “retirement financial advisor near me” may lead to solid prospects.
You can also search for advisors on the Certified Financial Planner Board and Garrett Planning Network websites. Both let you filter results by location or service, including retirement planning. As a bonus, all CFPs and Garrett Planning Network advisors are fiduciaries, so you don’t have to worry about conflicts and can trust that they will act in your best interest.
If you feel limited by the choices in your geographic area or can’t find the right advisor locally, don’t worry. Consider working remotely with an advisor who is farther away. The rise of online financial services allows you to cast a wider net to find the advisor who best suits your needs.
Questions to ask a retirement financial advisor
Aim to interview multiple retirement financial advisor candidates so you can compare their costs, their services and how well you get along with them. You want to find an advisor you enjoy working with and can trust with your future.
“Financial advisors are typically the first point of contact when a loved one passes away,” Eberle says. Finding someone you can count on to take care of your family when you are no longer around is important.
Be sure to ask your potential retirement financial advisor the following questions:
- How many clients have you worked with whose situations are similar to mine?
- What are the all-in costs of working with you?
- How will we communicate, and how often can I expect to hear from you?
- What is your investment philosophy?
- Are you a fiduciary?
Other tips for selecting a retirement financial advisor
You can also check the advisor’s professional background and disciplinary record through the U.S. Securities and Exchange Commission’s Investment Advisor Public Disclosure website or the Financial Industry Regulatory Authority’s BrokerCheck tool. Both services are publicly available and free to use.
Working with an experienced professional can impact the viability of your retirement plan, so be sure to assess your advisor’s track record. For the best chance at a successful retirement strategy, periodically review your retirement plan, stay informed about changes in the financial markets and remain actively involved in the decision-making process with your advisor.
Remember that working with a retirement financial advisor turns retirement planning into a team sport. While you can pass the ball to your advisor on some plays, you should remain on the court. After all, it is your future you’re playing for.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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