Retirement Planning Part 1: Partnering with a Financial Planner

A key component in planning for retirement is partnering with the right financial planner to help you reach your goals.  With thousands of professionals working under the title “Financial Planner,” it can be difficult to know how to choose the right planner for you.

Below, I have detailed some important criteria in choosing a planner, and 5 questions you can ask on a first meeting.  Going through this process will help you have the peace of mind that you have done the work and chosen a planner that is best for your situation.

  1. How long have you (the planner not their firm) been in practice? – As with any walk of life there is no substitute for experience. A financial planner with under 8 years of experience has not advised clients through a down market, such as the one we experienced in 2008-2009.  If we have another down market, how will that affect your retirement income?  Partnering with an experienced professional who has advised retirees through several market cycles is a huge plus.


  1. Are you fee only, or do you sell commissionable products? – An advisor who places you into a commissionable investment product will receive up-front compensation for that sale, but may receive little to nothing going forward based on the performance of your portfolio. A fee only advisor receives no commissions, and their revenues are directly tied to the performance of your portfolio.  Working with a fee only advisor is like partnering with a professional who is sitting on the same side of the table as you, the investor.


  1. Are you a Fiduciary? – Financial Planners adhere to 1 of 2 standards, the suitability standard or the fiduciary standard. The suitability standard states a planner can make an investment recommendation to a client based on the recommendation being suitable.  In short, the suitability standard allows planners to ‘up-sell’ commissionable products, and/or direct clients to investment products based on the compensation to a planner.  Financial Planners that adhere to the fiduciary standard are fee only, receive no commissions, and are legally bound to always make investment recommendations that are in the best interest of the client.


  1. What are my all-in-costs? – Investment products can carry several layers of costs and can even be hidden inside of the investment. It’s important to understand your all-in-cost to be sure they are reasonable for the services you receive from the financial planner and investment company.


  1. What is your ongoing process for managing my portfolio? – A general understanding of how the planner or their firm monitor your portfolio on an ongoing basis is important. Are their portfolios custom managed for retirees or are portfolios grouped by risk profile?  Retirees has specific income needs, so a portfolio should be designed to meet those needs.  This could include higher cash positions, defensive and/or income producing stocks, and safer bond investments.


These 5 simple questions during a first meeting is a great way to help find a planner that is right for you.

Retirement Planning Part 2: Asset Consolidation

Retirement Planning Part 3 – Portfolio Management

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