Finding a trusted adviser to help you get retirement ready just got a little bit easier. In late April, the Biden administration announced new rules “that will require more financial professionals to adhere to a higher standard when providing financial advice about your retirement money,” said The New York Times. “Starting Sept. 23, investment professionals who hold themselves out as trusted advisers will be required to act as fiduciaries — that is, they can’t place their interests ahead of the investor — when customers pay them for advice on individual retirement accounts, 401(k)s and similar buckets of tax-advantaged dollars.”
While this will help mitigate potential conflicts of interest and ensure an adviser is working in your best interest, it’s still important to suss out any professional you are entrusting with retirement planning. After all, these are your golden years you’re preparing for.
Where can you turn for help with retirement planning?
It is possible to plan for your retirement on your own, but many find it helpful to get some advice.
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If you just want a little guidance and “you have a retirement plan through your employer, they might offer some free seminars or classes on retirement planning,” said CNN Money. Additionally, “many 401(k) plans also offer varying types of advice and guidance, ranging from tools and calculators to help you plan.”
If you would like more personalized guidance, another option is to hire a retirement adviser. Basically, this “is a financial professional who helps you plan for and manage your finances leading up to and during retirement,” said Forbes, though technically the “broad” term “can encompass many different types of financial professionals, including financial advisers, certified public accountants (CPAs), certified financial planners (CFPs) and investment managers.”
How can you find a trustworthy retirement adviser?
A good start is to narrow down what you are looking for in an adviser. There are advisers who “give general financial advice and those who specialize in a certain aspect of retirement planning,” said Forbes, so if you know you want help in a specific area, look for an adviser with relevant expertise.
It is also helpful to familiarize yourself with the credentials an adviser can have, as there are a lot out there. You can focus your search on advisers with credentials “that actually require a substantial level of knowledge before the designations are awarded,” such as “the CFP (certified financial planner), the PFS (personal financial specialist) and the CFA (chartered financial analyst),” said CNN Money. This will at least ensure an adviser has “a proven level of competency within financial planning and investing.”
To find specific advisers, you can ask people you trust with similar financial situations, or you can also “head to the Financial Planning Association, which lets you search for planners by location or specialty,” said CNN.
Once you’ve found some potential options, interview at least a few of them, said Forbes, as this “gives you a chance to compare credentials, experience, fees and other factors,” and also helps you “get a feel for each person’s personality and see if they’re someone you can work with long-term.”
It is also important to do research on your own, and ask for some references to cross-check what the adviser tells you as well.
What should you consider when choosing a retirement adviser?
When it comes to deciding which adviser is right for you, here are a few points to consider:
- Are they a fiduciary? Fiduciaries “must follow strict rules of conduct and avoid conflicts of interest,” which “means they can’t provide advice that affects their compensation, unless they meet certain conditions to ensure investors are protected,” said the Times.
- Do you understand their costs, and can you afford them? It’s important that you fully understand how an adviser makes money and how they plan to charge you. As far as how much to spend, that “depends on your budget, assets and the level of financial guidance you need,” said NerdWallet.
- Do they have a clean background? Before signing on with an adviser, “always verify any credentials they claim to have and check to see if they’ve had any disciplinary problems such as fraud,” said NerdWallet. You can do this by looking up their Form ADV and going to FINRA’s BrokerCheck website.
