When It Comes to Retirement, Look for a Plan, not a Pitch

Imagine you have a big bucket of cash and three friendly acquaintances are offering to take care of it for you.

The first one tells you he can take the money you have and use it to make even more. But to get a bigger reward, you’ll have to take some risks. And if you need to get some of the money back at an inopportune time, you could lose a chunk of what you’ve earned.

The next one assures you she can absolutely keep your money safe, and you can have some control over when and how you access it. But any growth you might see is likely to be slow — so slow it might not keep up with inflation.

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The third one says he, too, can safeguard your money, not just for you but for your loved ones if something happens to you. And he even has some ways to make sure you can get a set payout every month, if that’s something you’re interested in. But it’s complicated and there may be some strings attached.

Who would you choose?

Welcome to the financial industry and the three worlds within it that are vying to help you manage your money: The Wall Street world, the banking world and the insurance world.

Can Your Adviser Do It All?

If you’re closing in on retirement, you’re probably somewhat familiar with all three, thanks to commercials and infomercials on Sunday morning TV or ads in your favorite publications. And that’s not necessarily a bad thing. Knowledge is power.

Unfortunately, all too often the marketing message — “We’re here to help with all your retirement needs” — is a thinly disguised pitch for products and services specific to whatever world is buying the ad space — and that world only. Stocks and bonds from the Wall Street world. Savings accounts and certificates of deposit from the banking world. Life insurance and annuities from the insurance world.

That’s confusing and, frankly, wrong. The person you want taking care of your big bucket of cash is the one who can do it all. Because for most pre-retirees and retirees, a diversified portfolio that includes products from all three worlds is usually the best way to go.

And that requires a plan, not a pitch. It also requires finding someone who can give you all three.

Time for a Background Check

But before you go to a steakhouse for a dinner seminar on Social Security or have the first office visit with your brother-in-law’s “guy,” it’s important to really research the person who will be offering you financial advice. What professional designations and licenses does he or she hold? Have they filed bankruptcy or do they have tax liens? And is this person even experienced in working with people like you?

The financial industry has made it pretty easy to do this homework. Both the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have tools that let consumers check out a financial professional’s credentials.

• On the FINRA site, you can access BrokerCheck (opens in new tab) to see if a person or firm is registered to legally sell securities and/or give investment advice.
• On the SEC’s Investment Advisor Public Disclosure (IAPD) website (opens in new tab), you can get information about both SEC and state Registered Investment Adviser firms.
• Or you can use the North American Securities Administrators Association (NASAA) site (opens in new tab) to get contact information for state regulators.
• If you want to find out if the financial professional you’re considering is a Certified Financial Planner, you can check the CFP Board’s website (opens in new tab).

What happens if the person’s name doesn’t show up on any of the sites you check? It might be a red flag that he or she won’t have access to all the products you need. A financial professional who is licensed to sell only life insurance products, for example, can’t work with you on buying stocks, bonds, mutual funds — or even some annuities.

Be Sure to Look for a Fiduciary

Finally, if you want an adviser who is looking out for your best interests, both legally and ethically, you’ll want to work with a fiduciary. If you aren’t sure if you current or prospective adviser is a fiduciary, just ask, “What legal standard do you operate under?” Or, better yet, ask to see some paperwork that proves it or to sign a fiduciary pledge for you, such as this:

Fiduciary Pledge

I, the undersigned, __________________________________, (“Financial Adviser”), pledge toalways put the best interests of __________________________________ (“Client or Clients”) first, no matter what.

As such, I will disclose in writing the following material facts and any conflicts of interest (actual and/or perceived) that may arise in our business relationship:

Financial Adviser: _____________________________ Date: ____________________

Client: ______________________________________ Date: ____________________

Client: ______________________________________ Date: ____________________

Here’s the thing: If you’re going to spend 80,000 hours (or more) out of your lifetime working, isn’t it worth 30 minutes to a couple of hours to research one of the most important financial decisions of your life? This is, after all, the person or firm you’re going to trust with your life savings — your big bucket of cash. And you’re going to want them to use every tool available to get you successfully to and through retirement.

Securities offered through Kalos Capital, Inc. and investment advisory services offered through Kalos Management, Inc., both at 11525 Park Woods Circle, Alpharetta, GA 30005, (678) 356-1100. Retirement Income Strategies is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Kim Franke-Folstad contributed to this article.

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