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Question: I will be 61 in March, and I’m wondering if I should hire an adviser to help me understand my retirement options. I want to know if I can retire at 62, or if I should keep working. Is this something I need an adviser for or can I take a DIY approach? (Looking for a new financial adviser too? This tool can match you to an advisor who may meet your needs.)
Answer: Whether you opt for an adviser or to DIY really depends on a few different things: your financial knowhow or willingness to dig into finances and learn about retirement strategies; the time you’re willing to spend managing your money; and how much you’re willing to spend to get help (or not). Managing your own budget and investments will be an undertaking, but if you’re committed to putting time and energy into the cause and you like to be in control, consider doing it yourself. Let’s start with the case for hiring an adviser, and then we’ll dive into the case for DIY.
Many good advisers are well versed in helping people navigate towards retirement, and one big advantage in hiring a pro is that they can bring up issues that even a pretty financially well-versed individual might not know to ask. Indeed, certified financial planner Jonathan Bird at Farnam Financial highlights two primary benefits to working with an adviser. “First, you’ll get answers to your questions on retirement. Second, you’ll get answers to questions you didn’t know to ask. These may include questions such as ‘How will I fund a potential long-term care event? How can I minimize my taxes in retirement? How can I prepare for a market downturn that happens after I retire,’” says Bird. (Looking for a new financial adviser too? This tool can match you to an advisor who may meet your needs.)
Certified financial planner Gordon Achtermann at Your Best Path Financial Planning adds that while knowing general rules of thumb can get you started, they can mislead someone who is “not trained to ask questions and uncover all of the factors that will influence their financial security and peace of mind in retirement.”
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Another big perk of an adviser is that they might help you avoid making costly mistakes. Indeed, Achtermann notes that retiring is a critical phase of your financial life, and “a mistake at this time may have tremendous consequences and will likely be irreversible.” Other mistakes you might make on your own include taking Social Security too early, misunderstanding insurance, errors in estate planning and more.
All that said, a financial adviser is costly. Someone who provides ongoing investment management will likely take a percentage of your assets under management and might charge 1%. Someone who charges hourly for financial advice might cost anywhere from $150 to $500 per hour. And an adviser who creates a one-time comprehensive plan that you then follow yourself might charge $1,000 to $7,500.
If that cost has you pausing, know too that you can DIY this. There’s a wealth of DIY resources available including retirement-focused books like Suze Orman’s “The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime;” “Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success (The Retirement Researcher Guide Series)” and Dave Ramsey’s “Retire Inspired: It’s Not an Age, It’s a Financial Number.”
For more general personal finance advice, consider free online courses like Udemy’s Personal Finance 101: Everything You Need to Know, Skillshare’s “My Financial Mountain: Understanding Your Path to Solid Financial Foundation,” and “Investing 101: Stock Market Course for Beginners by Stock Market 101. Personal finance books like “I Will Teach You to be Rich,” by Ramit Sethi, “The Total Money Makeover” by Dave Ramsey and The Simple Path to Wealth by J.L. Collins can also be useful when trying to wade through financial trenches.
How to find a good financial adviser
If you decide to go the adviser route, it’s essential to find a good, trustworthy adviser. Fee-only CFPs are the most vetted advisers and many experts recommend using their services because of their fiduciary duty (they’re legally and ethically bound to out your best interests first), they don’t receive commissions from recommending or selling financial products.
Sam Schwartz, certified financial planner at Anchor Pointe Wealth Management recommends consulting a checklist to make sure you end up working with a fiduciary who will put your best interests first. “Take time to research a planner’s experience and expertise and look for certifications like CFP or Chartered Financial Consultant (ChFC). Ask a planner how they can help you reach your goals and what strategies they’ll use to get there. Ask for references and don’t be afraid to call them and get feedback on their experience. Inquire about how they’re compensated and if they charge fees, find out if they’re hourly, fixed or a percentage of assets under management. Also ask about any other charges that might apply, like commissions or transaction fees because ultimately you want to ask yourself if you’re receiving at least as much value for the services as the fees you’re paying and if the compensation model and advice is aligned with your best interests in mind,” says Schwartz. (Looking for a new financial adviser? This tool can match you to an advisor who may meet your needs.)
You’ll also want to talk to prospective planners about their investment philosophy and how they plan to manage your investments and how they assess a client’s risk tolerance and whether it’s based on the client’s goals or the type of investments. “At the end of the day, financial planning and advisory services is a business of people, trust and relationships. Ensure that when you select a firm, you feel heard, seen and understood,” says Schwartz.
Have an issue with your financial adviser or looking to hire a new one? Email picks@marketwatch.com.
Questions edited for brevity and clarity.
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