Retirees, Pick the Perfect Financial Planner

When you’re trying to get a handle on your money, from investments and savings to figuring out retirement and preparing for your future, you might need help from an expert in the financial planning world.

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When you’re trying to get a handle on your money, from investments and savings to figuring out retirement and preparing for your future, you might need help from an expert in the financial planning world. But finding the right person can be more complicated than rebalancing your portfolio.

Perhaps you’re thinking of a wealth manager. But there are wealth management firms, with estate planning and tax specialists, and then there’s the junior employee at your bank listed as a “wealth manager.” Maybe you need a financial planner—but is the planner a financial adviser, a financial life planner, or a financial coach? If your money and emotional issues are creating problems, like addictive spending, you could consider a financial therapist, who could be a financial professional who has some training in counseling, or a mental health professional with some training in personal finance.

If you finally find the right professional, you’ll need to understand how you’ll pay for the advice. Some planners offer subscriptions, similar to your annual gym membership dues, with prices based on the complexity of your situation or your income. Maybe your planner is fee-only for some services and also charges an annual percentage fee based on your assets under management. Or the planner charges you an annual fee, or a retainer, for financial planning and advice only. Or a commission on products sold. Or a blend of all of the above.

“There’s a lot of confusion and for consumers it’s very difficult,” says Ruth Lytton, a financial planning professor at Virginia Tech. “There’s a big range of providers, services and products, and you need to know what you are getting into.”

It’s never been simple or straightforward to pick a planner or adviser, but the process has become more complex because of the transformation of the financial services industry. Brokerages and investment firms such as Vanguard and Fidelity now compete to offer commission-free trading to small investors. Individual investors can outperform actively managed funds by investing in passive investments (indexed exchange-traded funds and mutual funds). Roboadvisers can give you digital investing advice based on algorithms.

Financial advisers and planners are responding to all the changes by expanding their services to offer clients more than investment advice and retirement finance scenarios. Your adviser may want to understand your personal values and views on money, and make a plan based on how your finances can align with those goals. A planner may offer hands-on help, along with advice, helping you figure out long-term care for a loved one by joining you on touring potential facilities or referring you to an elder care professional. Some might sit down with you and help you fill out federal financial aid forms for your college student.

As long as it’s even tangentially related to financial planning, many firms will help their clients navigate the issue,” says Geoffrey Brown, chief executive officer of the National Association of Personal Finance Advisors (opens in new tab), or NAPFA, the fee-only financial professionals group. One adviser recently helped a client decide whether to lease or buy a new car, for example.

The financial profession as a whole is working to serve a broader swath of the population, including consumers with more modest incomes, younger workers and other non-traditional clients, Lytton says. “Planners are reaching out not just to those with wealth to protect, but those trying to build wealth,” she says. The changes have been particularly helpful to pre-retirees and retirees, who can tap advisers for more than investment advice. “The retirement piece of planning is a longstanding issue that has led clients to seek advisers, due to the complexity of the financial aspects of it,” she says. “But now, social issues, identity and self-esteem issues, and the need to be intellectually and personally engaged later in life, are questions that are also coming up.”

Advisers who understand this and broaden their services to include guidance on issues like career transitions and end-of-life-care are seeing success, says Christine Benz, director of personal finance for Morningstar. “The smart advisers understand how inextricably linked money is to all these other decisions we might have in our lives,” she says.

Advisers also are increasingly using video chats and teleconferencing, making financial advice more available to clients in rural areas and small towns where a planning firm doesn’t have a physical presence. Other advisers have expanded their reach on social media, offering expertise in real time on issues such as the effects of the SECURE Act.

Understand Your Choices

But the changing landscape also can be challenging for consumers. You have to understand what type of professional you need, what services to look for, what qualifications to ask about and how to understand fees. It gets even more complicated, because categories of advisers are currently “squishy,” as Benz puts it. Someone who focuses mostly on your investment portfolio is a wealth manager, but wealth managers are a type of financial adviser. Advisers work at brokerage firms, such as Morgan Stanley and Merrill Lynch, or they are sole proprietors, like the retired neighbor advertising on the local listserv. It’s up to you to determine qualifications and experience, and financial planning industry credentials aren’t always clear, she says. “It’s so confusing for consumers because the designations floating around don’t help matters,” Benz says. “A lot of consumers see people with a lot of letters after their name but that’s not necessarily good. They’re not all on equal footing.”

But with some effort, you can find the right financial professional. Your search is about finding what kind of adviser you’re most comfortable with, so consult with several professionals and sample different approaches to decide on the right fit. You’ll need to evaluate specifics, but you can begin with a general premise: Do the work to find an adviser. Don’t only let the services just come to you through marketing or sales pitches. Then, get started with the steps outlined in this guide.

Mary Kane
Associate Editor, Kiplinger's Retirement Report
Mary Kane is a financial writer and editor who has specialized in covering fringe financial services, such as payday loans and prepaid debit cards. She has written or edited for Reuters, the Washington Post, BillMoyers.com, MSNBC, Scripps Media Center, and more. She also was an Alicia Patterson Fellow, focusing on consumer finance and financial literacy, and a national correspondent for Newhouse Newspapers in Washington, DC. She covered the subprime mortgage crisis for the pathbreaking online site The Washington Independent, and later served as its editor. She is a two-time winner of the Excellence in Financial Journalism Awards sponsored by the New York State Society of Certified Public Accountants. She also is an adjunct professor at Johns Hopkins University, where she teaches a course on journalism and publishing in the digital age. She came to Kiplinger in March 2017.