For some people in the Rockford area meeting with a Financial Advisor about retirement can be an intimidating experience.
Others are already working with a Financial Advisor, but they are just not sure if their advisor is fully equipped to help them make the all-important transition from work life to retirement.
This article will give you some good questions to ask before heading into a meeting with a Financial Advisor to talk about retirement.
Before we jump right in if you are getting close to retirement and have not viewed my FREE Retirement Video make sure you CLICK HERE NOW.
Question One: How Do You Get Paid?
I know this one can be an awkward question to ask so let us rip off the band-aid and get this important question out of the way.
How an advisor gets paid can actually affect the type of advice you can expect so you need to know.
To get up to speed on this one I devoted an entire page of my website to just this topic because its just that important.
To check out my article and video on the topic How Much Does It Cost To Work With A Financial Advisor? Please CLICK HERE.
Question Two: Are you a Fiduciary?
A Fiduciary is someone who is legally required to put your interests ahead of their own when giving advice.
You would think all people engaged in offering Retirement Planning Advice should be acting as a Fiduciary but that is NOT necessarily the case.
To get more familiar with the different types of Advisor business models out there and which one acts as Fiduciaries and which do not (please again see the article referenced above). How Much Does It Cost To Work With A Financial Advisor?
Question Three: How Long Have You Been Working As A Retirement Planning Advisor?
This is an important question.
Many people enter into the world of Financial Services after failing out of another industry or because they became the victim of corporate cutbacks or downsizing.
The unfortunate truth is Financial Services is an industry with a low point of entry and that means it is easy for anyone to give it a try.
All you need to do is pass a test and get a license.
But getting a license does NOT make you an expert it just lets the State know that you know enough to be liable for your advice.
If you are working on something as complicated as making the transition from work life to retirement life, you want to work with someone who has been doing this a while.
And maybe you do not want to work with someone who is on their second or third career, is trying to find themselves, and figures they are pretty good with money.
It would be preferable to find someone that has had a lifelong passion for finance and has already walked hundreds of people just like you through this challenging stage of life.
Question Four: Do you have any Red Flags on your record?
This could also be an awkward question to ask but certainly an important one.
Not every Advisor you meet is entirely ethical and will come with a clean record.
The truth is bad advisors leave a trail and you need to do your own due diligence when trusting someone with something as important as investing your money.
For additional help with understanding how to perform the proper due diligence please check out my short article, How To Find The Best Financial Advisor In The Rockford Area?
Question Five: If I work with you who will hold the Money?
This is another question designed to help protect you from unscrupulous Advisors who could mean to do you harm.
You probably have heard of the notorious fraudster Bernie Madoff who in 2008 stole more than $20 Billion dollars from the very people who trusted him.
One-way people like Bernie can get away with that level of fraud is by holding their client’s money directly instead of using an outside Custodian like Fidelity, Vanguard, TD Ameritrade, or the like.
If your advisor uses an outside Custodian to hold the money, then you have a place you can go to see every transaction and fee in real-time.
If your advisor does not use an outside Custodian then they can print off a report for you that says whatever they want it to say, even if it does not reflect the truth.
Make sure your Retirement Advisor uses a third-party reputable Custodian.
Question Six: Do I have enough money to Retire?
Chances are if you are nearing retirement this may be a question that is already on your mind.
This can be a complicated question that requires more than just a knee jerk, rule of thumb type of an answer.
A good retirement advisor should use a software tool that helps them not only to calculate if you will run out of money but it should be simple enough that you can understand how he or she came to that conclusion.
If they need to show you a booklet full of charts and graphs to answer a simple question you may have to wonder if they even understand it all.
This should be a question they are really good at answering AND explaining in simple terms.
Can you also help me with Social Security, Medicare, Long Term Care, Life Insurance, and Estate Planning?
While many people in Financial Services hold themselves out to be planners, I find that few are actually interested in doing much planning.
We all like the title of Financial Planner or Advisor but for some all that really means is I want to manage your money because that is how I get paid.
Again, do not forget to check out the link to the video in question one, How Much Does It Cost To Work With A Financial Advisor?
At the above link, I go into detail about how different types of Advisory business models will treat you differently depending on how they get paid.
A good financial advisor will work with you on a comprehensive basis not ONLY helping you with managing your money but also helping you with every aspect of Retirement Planning.
I have been teaching a class on how to maximize your Social Security income for about 15 years and it never ceased to amaze me that some people would take my class and come to see me even though they had an Advisor?
They would tell me that their current advisor did not do anything to help them with Social Security planning!
That always blew my mind. How can someone tell you they are a Retirement Planning Advisor but not want to help you maximize a significant part of your income?
Your Social Security questions, Health Care Cost questions, Insurance questions, and Tax-related questions should all be on a good advisor’s radar.
If someone only wants to manage your money can you really call them a Retirement Planning Advisor? Is that the kind of relationship you are looking for?
Or do you want to work with someone who can help with ALL of it?
Question Eight: How will we communicate about my Retirement Plan?
Managing your expectations about how the relationship will move forward is always a good idea.
Some people are expecting that they will be meeting with their advisor every quarter to do a review when in reality the Advisor may not be expecting to meet but once per year.
When would it be a good idea to know where you stand?
For example, in my practice, we meet with clients many times during the first year or so as there are lots of things that need to be corrected and addressed.
We might have 3 or more meetings to get the money where it needs to be, then another 3 meetings to get the Estate Plan where it needs to be, and then finally we may meet another 3 or 4 times to get the right insurance and tax planning in place.
So that first year we might meet 10 or more times!
But after we get everything where it needs to be, we typically only need to meet once or twice per year to adjust and answer questions.
Now that is the model, we follow in my practice, but every practitioner of Financial Advice may work a little differently. Find out what is typical for the Advisory Firm that you are going to work with and see if it fits your expectations.
Question Nine: What do you love about being a Retirement Planning Advisor?
Unlike some of the other more awkward questions, this can be a fun one.
Hopefully, you will get a big smile from your Advisor as he tells you about all of the great people he or she has met and how they were able to help them.
They should tell you how they love to learn new things and then share those ideas with others with the goal of improving their lives throughout retirement.
This can be such a rewarding line of work and it is so wonderful to develop such intimate relationships with so many people.
If you get a deer in the headlight’s response, look out!
That could be a bad sign.
Question Ten: What do you do to protect your clients from the Sequence of Returns Risk?
I know this one might sound a little technical but here me out.
The truth is every advisor would love to invest your retirement money but not all of them are qualified to do so.
When you are approaching retirement the rules of investing for most of us change dramatically.
What worked when you were accumulating your money will NOT help you preserve your wealth through retirement.
Once you start taking income or even your required minimum distribution your account becomes subject to “Sequence of Returns” risk and that can put you in jeopardy of running out of money sooner than you expected.
Many advisors are not fully aware of this and they do not plan for it at all.
To find out about Sequence of Returns Risk, and why not knowing about it could cost you dearly check out my FREE RETIREMENT VIDEO. CLICK HERE NOW
Disclosure: Investment Advisory Services offered through Retirement Wealth Advisors, LLC. (RWA) a Registered Investment Advisor. Rockford Retirement Planning, Inc. (RRP,Inc.) and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that RRP,Inc. and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.
Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any references to protection benefits or lifetime income generally refer to fixed insurance products. They do not refer, in any way to securities or investment advisory products or services. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors, LLC.
Social Security/Government Program Disclosure: Antonio Filippone of Rockford Retirement Planning, Inc and Retirement Wealth Advisors, LLC are not affiliated with or endorsed by the Social Security Administration or any other government agency
MDRT Disclosure: The Million Dollar Round Table is a trade association to help insurance brokers and financial advisors establish best business practices and develop ethical and effective ways to increase client interest in financial products, specifically risk-based products like life insurance, disability, and long-term care. Annual qualification requirements include demonstrating a set annual production requirement and agreeing to a code of ethics but are not based on client experience or performance. For more information regarding the Million Dollar Round Table eligibility, please see https://www.mdrt.org/membership/requirements/. Membership in no way constitutes an endorsement from Million Dollar Round table or any client.
Top of the Table:To qualify for top of the table a member must demonstrate an annual commission of six times the base requirement.