A financial planner can be helpful in building retirement savings, whether you’re just starting out or nearing the end of your career.
But before signing on with just any financial planner, there are basic questions that should be answered, like how much to save, what your retirement expenses could be and when to file for Social Security. Just as important is learning about the person to whom you’re entrusting your life’s savings.
With that in mind, what follows are seven questions to ask your potential financial planner when retiring.
1. What Services Do You Provide?
Your financial planner’s goal should be to help you determine retirement’s potential challenges and the steps needed to reduce those challenges. As such, services offered might include:
- Determining how much is needed to retire
- Selecting investments to match your risk appetite and time horizon
- Managing current and future expenses
- Developing long-term care plans
- Implementing a favorable tax strategy
The planner might offer other services, such as estate planning, business succession, or insurance.
2. What Are Your Qualifications?
Your potential financial planner should offer proof of advanced financial and retirement planning education. Designations in the field include CERTIFIED FINANCIAL PLANNER™ (CFP®), Chartered Financial Consultant (ChFC®), or Chartered Life Underwriter (CLU®). A planner who is a Retirement Income Certified Professional (RICP®) has retirement-specific training and education.
Your financial planner should also be a fiduciary. In other words, they’re legally required to act in your best interest, rather than theirs.
3. How Are You Compensated?
There are many ways in which your financial planner can be compensated. He or she can be paid hourly, per transaction/on commission, or based on the value of your assets under management (AUM). Keep in mind there is no right or wrong method of compensation. But be sure that the service offered is worth the compensation method.
4. Who Will Be My Account’s Custodian?
Your financial planner is just that—the individual who helps you plan for your future. A custodian is the entity that has actual contact with, and holds the assets, including buying, selling, collecting dividends, producing monthly statements, and making distributions. This could be a third-party company (such as TD Ameritrade) or a wholly owned subsidiary of your financial planner’s firm.
5. How Will You Communicate with Me?
You should know, upfront, how often you’ll be in touch with your financial planner. You typically should have meetings set up with them at least once a quarter, and they should provide reviews of your portfolio status when you ask for them. And they should always be willing to talk with you about any concerns or questions you have about your investments.
6. What Is Your Investment Philosophy?
Your advisor should be able to outline, in clear English, the reasons behind certain investments, and how those strategies will help you potentially obtain the annual return needed to reach investment goals. This should be presented in terms that you can easily understand.
7. What Do You like about Being a Financial Planner?
You want to find a financial planner who likes numbers and finance, of course. You should also find one who genuinely wants to help people meet their financial goals, whether they involve wealth-building, tax strategies, paying down debt, or ensuring enough for retirement.
Think of it this way: Your financial planner will be responsible for making sure you have enough money to fund the lifestyle you want to lead upon your retirement. As such, asking questions before signing on the dotted line can help ensure that you’re working with the best individual to help meet your needs.
