How to Find a Financial Adviser for Retirement Planning

Happy mature financial adviser or insurance agent working on a computer while talking to her clients during a meeting in the office.

(Image credit: Getty Images)

Acing all the key components of retirement planning is akin to getting a perfect score on the SAT college entrance exam. It’s not impossible. But for most people, it’s a long shot. And just as a prospective college student may seek help preparing for the SAT, it often makes financial sense for everyday Joe and Jane 401(k) plan savers to seek a financial adviser to help them map out a retirement strategy.

Even 401(k) do-it-yourselfers who did just fine during the nest-egg accumulation stage realize that there’s a lot more complexity in the so-called “distribution phase” when work paychecks stop and paying the monthly bills relies on the retiree’s own assets and retirement plan.

It’s not easy for a DIYer to figure out how much income they’ll need for retirement. Key questions may seem straightforward, but they may quickly get complicated. For example: what funds should I invest in; how should I divvy up assets between stocks and bonds; when should I take Social Security; how should I manage required minimum distributions (RMDs); what financial accounts should I withdraw money from to save on taxes; and should I convert a traditional IRA to a Roth IRA?

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free 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.

That’s a mouthful. However, the laundry list of retirement puzzle pieces is designed to illustrate that coming up with a perfect retirement plan on your own is challenging. For most people, it’s simply too heavy a lift.

When the job of overseeing your retirement-related finances becomes too complex or overwhelming, getting help from a financial adviser could relieve some of the burden. Indeed, working with a financial adviser acting as a fiduciary (e.g., someone who puts your best interests ahead of their own) can go a long way toward helping you get your finances on track, whether you’re nearing retirement or already enjoying your golden years.

The financial adviser, who offers services ranging from retirement planning to portfolio advice, risk management, and tax planning, will assess your financial position holistically and develop a financial plan to help you set and achieve your goals and desired lifestyle in retirement.

So, if you’re looking for a financial pro to help you plan for retirement, where do you start?

How to find a financial adviser for retirement

Word of mouth: One way to jumpstart your search for a financial adviser who specializes in retirement planning is to ask friends, family members, and professional contacts for referrals. Getting recommendations from people you trust, especially your accountant, attorney and other so-called “centers of influence,” can get the ball moving.

Look into a large brokerage firm: Another good option, especially if you already have a relationship with an investment company or brokerage, such as Fidelity Investments, Charles Schwab, Vanguard, or T. Rowe Price, to name a few, is to investigate the relatively low-cost advisory options, retirement planning solutions, and investment options these well-known firms offer. These services typically range from digital advice to a more traditional advisory relationship that includes your own dedicated adviser. In fact, many financial firms, including Schwab and Fidelity, have an adviser search tool on their websites,

Use industry group search tools. Tapping the resources of industry groups representing financial advisers and financial planners is also helpful. For example, the National Association of Personal Financial Advisors (NAPFA) helps you initiate contact with a financial adviser in just a few clicks. Similarly, the Certified Financial Planner Board offers a search tool to find advisers who have earned the Certified Financial Planner (CFP) designation. Some sites allow you to search by zip code, assets under management, area of specialty (such as retirement planning or estate planning), and by the type of client the adviser focuses on (e.g., women, retirees, or LGBTQ).

Financial planning networks: These networks are another excellent resource for locating financial advisers, according to NerdWallet. Examples include XY Planning Network, whose advisers hold the CFP designation and offer virtual services; and CHIP, which focuses on matching clients with African American, Hispanic, and Latinx financial advisers.

Check each adviser's certifications. You’ll run into acronyms for financial certifications and credentials when searching for financial professionals. A CFP, for example, stands for a certified financial planner. This financial professional has passed a comprehensive exam on financial planning topics and has met a minimum threshold for hours worked in a financial planning capacity. CFPs are held to a standard that requires them to act as fiduciaries. You may also encounter a ChFC, which stands for Chartered Financial Consultant, or an RIA, a Registered Investment Advisor.

Do your due diligence. No matter their credentials, ensure you check their professional background, Fidelity Investments advises. “That means treating them like you would any other person you were considering hiring for a job: by looking at their resume or LinkedIn as well as asking for references,” Fidelity noted in a blog post. You can also run a free background check using the Securities and Exchange Commission’s Investment Advisor Public Disclosure database or FINRA’s BrokerCheck system.

Ask these questions before you hire a financial adviser

Michael Cherny, head of Citizens Wealth Management Advisors, recommends getting to know a potential financial adviser better by asking key questions during your first introductory meeting. “Your first meeting can help determine if the financial advisor is a good match for you professionally and personally,” Cherny wrote in a blog post.

Here are the questions Cherney recommends you ask:

What are your experiences and qualifications? Find out how long they’ve been in the industry and if they have any specialty designations like a CFP or if they specialize in retirement planning.
Have you worked with people like me before? You can often find a better match, says Cherny, if the adviser commonly works with clients your age and income range and who share similar retirement goals.
Do you manage investments, prepare financial plans, or both? Make sure the adviser specializes in the area you need help.
How do you approach investing? You want to ensure that the adviser invests in a way that you are comfortable with and that aligns with your risk tolerance and goals.
How will we communicate? Get a sense of how frequently you’ll touch base with your adviser. Will it be a monthly, quarterly, or annual check-in? And find out whether you will meet by phone, in person, or digitally. Ask to see a demonstration of the financial software your adviser uses.
How do you get paid? As noted below, financial advisers are compensated in several different ways. They can charge you based on the amount of money in your account, by the hour, or a flat fee. So, make sure you find out what payment system will be used and that you’re comfortable with that arrangement. “You may also find advisers who earn commissions by selling investments,” says Cherny. Commission arrangements should be evaluated carefully, as advisers can earn commissions by putting you into specific mutual funds or other types of investments when there might be lower-fee options available.

How much do financial advisers charge?

The cost of a financial adviser depends on how the financial professional charges for their services. Here are the common pricing structures:

Assets Under Management. Often, financial advisers charge a percentage based on assets under management — or how much of your money they manage. The industry median charge is 1% (meaning half charge less and half charge more), according to Fidelity. So, if a financial adviser is managing $500,000 of your money and charges 1% of assets under management, their services would cost you $5,000 per year. But it’s possible to get advice for less due to the competitive nature of the business. So, shop around and compare the costs for advice based on assets under management.

Hourly. Some charge by the hour, not by the balance in your account. Rates range from $200 to $400, according to financial website NerdWallet. Going the hourly rate route is a good option if you just want to set up, say, a basic retirement savings plan, or you want an adviser to analyze the holdings and asset allocation in your 401(k) to see how much income that will generate, as well as let you know if you’re on track for retirement or whether any tweaks to your portfolio are necessary to reach your goals.

Flat fee. Some financial advisers charge a set fee based on the work they do. This pay structure is akin to an à la carte menu at a restaurant, where each menu item you select comes with its own charge. A financial adviser, for example, may quote you a set one-time fee to create a comprehensive financial plan for you.

Should I use a robo-adviser to save money?

Not every investor has the time or money to hire a real-life financial adviser to help them with retirement planning. Some people have simple goals, such as saving for retirement or planning a 4% annual withdrawal strategy, and therefore don’t require a comprehensive retirement financial plan. For these people, a robo-adviser may be a good option. Robo-advisers can deliver digital portfolio management and asset allocation decisions at a fraction of the cost of a traditional adviser.

There are several factors to consider when choosing the best robo-adviser for you.

Keep in mind that some digital robo-advisers, including Facet Wealth and Empower, as well as many big brokerages and mutual fund companies, also offer virtual access to a human financial adviser if a financial plan is needed.

Red flags when hiring a financial adviser — avoid the sharks

Studio photograph of middle-aged Businessman on Pink background pointing at camera, making gun fingers. With short, greying hair and glasses. Wearing grey suit jacket and black polo shirt. He looks like he's trying to sell a scam.

Zoe, a wealth platform that vets independent financial advisers and connects them with people seeking advisers, highlights key red flags to watch out for when shopping for an adviser.

For one, you’ll want to think twice about joining forces with an adviser who focuses on short-term performance rather than a long-term plan. You should also tread carefully with advisers who claim to consistently outperform the market. Advisers who push products, such as mutual funds or annuities, for which they earn a commission, are another red flag. It’s also important to vet financial advisers to ensure they have no record of unethical or illegal behavior.

Adam Shell is a veteran financial journalist who covers retirement, personal finance, financial markets, and Wall Street. He has written for USA Today, Investor's Business Daily and other publications.