When someone asks me how much I charge for the work I do, I’m never quite sure how to respond.
I can explain that it depends on the investment and insurance products I offer, or the advisory services I’m providing, and we can discuss how it all breaks down in dollars or percentages.
But I’ve found that what most people really want to know is if I’m less expensive than their guy — and that’s a more complicated answer. Sometimes their guy is with a firm that’s strictly doing investment management. Or it’s a robot — what some call a robo-allocator — again, doing investment planning only.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The person who’s asking — maybe it’s a friend or perhaps just an acquaintance — might even be managing his portfolio by himself. You can’t get much less expensive than that.
But it’s apples to oranges.
So we end up in a conversation about fee comparison and online trading and intense pricing competition, when what we should be talking about is what it’s going to cost him, and his family, if he doesn’t have the guidance of an adviser who strictly focuses on retirement and financial planning.
In the same amount of time it takes to explain how fees work, I could share three ways an experienced, knowledgeable adviser earns his money — especially when a client is closing in on retirement.
1. Tax planning.
Unless you’re working with a financial professional who offers comprehensive planning, you aren’t going to get a forward-looking tax strategy that deals with the money within or outside of your retirement accounts. Both have their consequences. The money in your IRAs will be a factor when you retire, because it can affect your tax bracket in a way you don’t expect. Your taxable accounts already may be causing problems you don’t even know about, if they’re actively traded. Either way, an adviser can help keep taxes down on money you aren’t using as income.
2. Health care, long-term care and estate planning.
Maybe you’re doing your own planning, or using a very low-cost mutual fund company. If so, you likely aren’t going to get any advice regarding the future costs of health care or long-term care, or help with providing a legacy for your family when you pass away. Many people overlook these issues until it’s too late — and these “unexpected” costs can devastate a family.
3. Income planning.
You may be working with a financial professional who’s doing a good job accumulating money for your retirement — but if you don’t have a solid distribution plan in place, you still could come up short or lose a large chunk of your money to inflation, taxes or too much risk. I often meet people who have no systematic strategy for withdrawing money based on their assets. They have no idea when to file for Social Security. And they’re stressed out because they don’t have any other cash flow coming in.
There’s no question that in this business, or any business, you must be competitive. But consumers should be aware that, particularly going into retirement, they benefit from a higher level of help.
A retirement plan is a complex puzzle that needs to be put together properly. Just like any puzzle, if you’re missing even one piece, it’s not complete. And that gap could cause the whole thing to fall apart.
Investment advisory services offered through Global Financial Private Capital, LLC. Bryan Slovon does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.>/i>
Kim Franke-Folstad contributed to this article.
-
What About Those ‘Guaranteed’ Life Insurance Ads?Guaranteed life insurance policies can sound tempting if you've been declined for insurance elsewhere. Here are four downsides and one alternative.
-
13 Answers to Pressing Social Security QuestionsFrom smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the FairwayThink of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty MovesIf you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
-
Your Home + Your IRA = Your Long-Term Care SolutionIf you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a RecessionRecessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income PlanningOnce you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.
