How to find a trusted retirement advisor for peace of mind in your golden years
It’s never too late to get serious about retirement planning — even if you’re thinking of leaving work in a few years. In fact, folks over 55 have access to more savings opportunities than their younger colleagues. Even if you’re familiar with how retirement planning works, hiring a professional can be a good investment in your future.
A retirement advisor helps you manage your money as you plan for retirement, while giving you a sense of how much you can spend during retirement to make your savings last. Their market expertise may also help maximize your savings. If you’re anxious about retirement, working with an advisor can also give you peace of mind by assuring you that you’re on the right path.
What type of advisor should you look for?
Financial advisor is a broad term that covers several types of professionals, including certified public accountants (CPAs), certified financial planners (CFPs) and investment managers.
When it comes to managing your retirement funds, you’ll likely want to work with a CFP, chartered financial analyst (CFA) or a personal financial specialist (PFS). All three are board-certified professionals that have taken about a year of relevant coursework, passing a licensing exam and background check.
You may also want to look for someone with one of the following retirement-related credentials:
A chartered retirement plan counselor (CRPC) specializes in advising individuals in retirement planning and may be the best choice for those who want help saving for retirement.
A retirement income certified professional (RICP) is similar to a CRPC but with an emphasis on managing income during retirement — rather than saving before retirement.
A chartered retirement plan specialist (CRPS) specializes in retirement planning for businesses and employees. While their expertise isn’t as focused on individuals as a CRPC or RICP, these specialists have more expertise in retirement planning than your standard CFP.
It's an alphabet soup, but a CRPC, RICP or CRPS isn’t necessarily a CFP, CFA or PFS — though many are. However, all must have at least a few years of experience working in the field before they can receive this type of certification.
???? Look for a fiduciary
Regardless of their credentials, look for an advisor who is a fiduciary. Being a fiduciary means that they have a legal responsibility to act in your best interest, manage your money carefully, keep your money separate from theirs and maintain good records.
A nonfiduciary advisor is not bound to having your best interests in mind, and they might earn commission on products that earn high profits for them but aren't necessarily best for you or your retirement goals.
How to find a retirement advisor
You can start your search for a trusted retirement advisor in several ways, starting with recommendations or referrals from friends, family and other trusted resources.
Friends and family
Many people prefer to start asking around for recommendations from trusted friends and family. Word-of-mouth recommendations can give you a stronger sense of what an advisor has to offer — and what their weaknesses might be — than you might find if you simply relied on online reviews.
When relying on personal recommendations, watch out for red flags — after all, Bernie Madoff grew his Ponzi scheme through word of mouth. Anything that sounds too good to be true probably is too good to be true.
Financial institutions
You can widen your search by looking directly through financial institutions that you already use. Chances are, your bank, credit union or investment firm also offers retirement advisor services. If you’re already a customer, you may be able to get a free assessment. (If you’re a Chase customer, you’re likely bombarded with emails from J.P. Morgan Wealth Management for free appointments.) Many companies that manage retirement accounts also offer free, bare-bones services to customers.
Working with one of these institutions may sound like the easier route. After all, they already have access to some or all of your financial records. Big institutions may also be more willing to work with middle-class clients than private advisory firms, which typically work only with clients that have at least $100,000 in assets available to invest.
However, your bank’s advisor may not have the same credentials that you might want in a financial advisor. Some banks may also only give advice on products that they offer — not on the market in general. Before engaging their help, it’s worth asking if they’re limited only to products offered by the bank.
Professional associations and matching services
Professional associations — such as those that issue certifications — often support public databases that you can search to find a retirement advisor with the type of credentials you’re looking for. Some private companies also offer matching services to help individuals find an advisor.
Here are a few places where you might want to start your search:
Let’s Make a Plan — a CFP Board website — allows you to search for a CFP that offers retirement planning and retirement income management services. You can sort through results based on services offered and the minimum investable assets required.
Financial Planning Association is a trade organization for CFPs that allows you to search its members by name or location. You can compare results based on specialty and how they structure their fees.
The National Association of Personal Financial Advisors (NAPFA) is another professional organization for fiduciary financial advisors that charges fees, rather than commission, and meets the NAPFA’s educational and ethical standards. You can use the NAPFA website to find a NAPFA member in your area — though you can’t easily compare asset requirements or fee structures.
Wealthramp is a matching service that can connect you with a vetted list of fiduciary financial advisors that have passed a background check and undergone an interview with the company’s founder, Pam Krueger, creator and co-host of PBS’s MoneyTrack.
These services might be more useful for people who have money to invest. While Let’s Make a Plan can help you find an advisor with low or no asset minimums, these services may not necessarily disclose this information. But even using Let’s Make a Plan won’t help you find many options with less than $100,000 or $250,000 in investable assets. Some may require as much as $500,000 or even $1,000,000.
Robo-advisor apps
Robo-advisor apps can help you dip your toe into retirement planning or management without fully committing to an advisor. This automated approach tends to cost much less than an advisor and gives you control over managing your assets. They also have low account minimums to get started — if there’s a minimum at all.
Some plans like Robinhood may offer bare-bones retirement and services, such as an IRA match. But others, such as SoFi, offer members free appointments with a CFP.
How much do retirement advisors cost?
How much a retirement advisor costs depends on how much wealth you have to invest and how your advisor bills you for their services.
Fee-only advisors — also known as fee-only fiduciaries — charge a fixed fee for their services. Others earn a commission based on financial transactions, such as buying and selling stock. Some charge a hybrid of commission and flat fees.
Here’s how much these fees and expenses typically cost, according to Advisory HQ:
Percentage-based fee. Around 1% of the value of your assets under management (AMU) with a firm. This is typically a better deal for people with under $1 million in assets. Robo-advisors typically charge between 0.25% and 0.5% of your account balance.
Retainer fee. Around $6,000 to $11,000 per year, depending on the complexity of your finances. Advisors often charge this in addition to an AMU percentage-based fee.
Fixed fee. Usually between $7,500 and $55,000. These also depend on your assets, with lower fees charged for assets under $500,000 and higher fees for assets over $7.5 million. This is often a better deal for people with assets of more than $1 million.
Hourly rate. Usually between $120 to $300 per hour of work for fiduciaries. For retirement planning, your advisor may spend between 14 and 20 hours per year. That works out to an annual cost of $4,200 and $6,000.
Commission-based fee. A percentage or flat fee per trade that your advisor brokers — between $8 and $10 per trade, or 3.0% to 8.5%.
Many people prefer to work with a fee-only fiduciary, rather than a commission-based or hybrid advisor. That’s because commissions can introduce a conflict of interest: Commission-based structures offer advisors an incentive to trade in a way that earns them the highest commission. While all fiduciaries are technically bound to act in their client’s interest, on a practical level it’s difficult to prove when they aren’t.
You might also have an option to hire an advisor for a one-time retirement consultation. This typically costs between $1,500 and $2,500.
What to expect from your retirement advisor
Most advisors start with a consultation — often for free. During this initial conversation, your advisor should explain how their fee structure works and give you an overview of their process. They’ll also ask basic questions about your assets, investments and liabilities and your plans for retirement: when you want to retire and how you want to spend that time, whether it’s buying an RV and traveling the country, taking up a new hobby or starting a consulting business.
Typically a financial advisor will send you an engagement letter before you sign up for their services. An engagement letter is an industry standard that promotes transparency about your advisor’s fiduciary responsibilities. This legally binding contract typically covers your advisor’s compensation, the scope of services they will provide, any potential conflicts of interest and your responsibilities as a client. It may also outline the protocol the advisor follows with retirement clients.
After you sign on as a client, your advisor will usually put together a report that gives you a sense of how much you’d need to save to reach your retirement goals, along with an estimated monthly budget during retirement. They may suggest you move around certain assets to minimize taxes, help set up a portfolio to meet your goals and suggest when you might want to retire or start receiving Social Security.
Once you’re done with the initial planning process, you’ll typically meet with the advisor annually to review your plan and suggest changes, if necessary.
Top benefits of hiring a retirement advisor
Hiring a retirement advisor is not free, but it may be well worth the cost. Here are some of the main reasons you might want to work with an expert:
Set expectations. An advisor has the credentials and experience to set you up for the kind of retirement that you envision. They’ll also help set realistic expectations for when you can afford to retire and what you’ll be able to do with your time and money 10 years down the road.
Peace of mind. If you’re second-guessing yourself about when to retire or start taking Social Security, having a set plan can help relieve your anxieties about winding down your career.
Motivation to save. Having concrete goals that you set with an expert can be a great way to motivate you to put away money for the future.
Easily adjust to changing circumstances. Your advisor can offer expert advice to help you manage changes in the stock market, government benefits and even your health.
Expert advice. Navigating the financial markets on your own can be tricky and risky. Investment advice can help stretch your savings as far as they’ll go.
Quality retirement advice is generally not free. But, like investing in a home improvement, hiring a professional could actually increase your net worth in the best cases.
How to choose a financial advisor
There are several factors that you might want to consider when choosing a financial advisor. A lot of this information can be found in a letter of engagement, though not all. Use these factors as guidelines for your conversation during a consultation.
Range of retirement-related services
The easiest way to find a retirement advisor is to go with a professional with certification in a retirement-related field. Otherwise, look for an advisor that offers financial planning, investment management, tax planning, estate planning or long-term care planning.
Fees and commissions
Ask for an outline of the types of fees or commission costs you can expect to pay. Since expenses vary widely among retirement advisors, also ask for a general range of annual costs. That way, you can make an apples-to-apples comparison.
Credentials and experience
When comparing firms, ask about credentials and the internal standards they set for their employees when it comes to ethics and expertise. This is particularly important if you get a recommendation by word of mouth, rather than through a service that can verify certification.
Certification is the gold standard, but a lack of certification may not necessarily be a red flag, especially if the advisor comes highly recommended from someone you trust. Some financial advisory firms also may not require all of their employees to have or maintain a specific certification, but still require their employees to meet certain standards, such as passing a CFP exam.
Even with certified professionals, use the Financial Industry Regulatory Authority (FINRA) BrokerCheck to verify that they are who they say they are. The FINRA BrokerCheck tool can tell you the following about a firm or advisor:
Securities and Exchange Commission registration — required to sell securities or offer investment advice
Employment history
Licensing information
Regulatory actions against the firm or advisor
Arbitrations and complaints involving the firm or advisor
Also make sure that they’re not on the list of individuals barred by FINRA. The SEC action lookup tool can also be useful to check the background of an advisor who is not registered as a broker. Your state’s regulator may also have additional information about a firm or advisor that you’re considering.
Ethical principles and conflicts of interest
Ask about the obligations a financial planner has to their clients, as well as the conflicts of interest that might affect your retirement plan. You can often find these outlined in your engagement letter.
Look for an advisor who mentions having a fiduciary responsibility toward their clients. Also look for an advisor who has minimal conflicts of interest. A fee-only fiduciary with in-house services can help you avoid common conflicts of interest like commission and referral fees. Most advisors will have some small conflict of interest — even fee-based advisors will receive a higher payment the more money you have in their management.
Support and ongoing support
How comfortable are you working with this advisor: Do you feel like they’re listening to you when you tell them your hopes for retirement, or do they jump right into a plan without much thought to your input?
Also ask about what kinds of services you can expect after you set up your initial plan. For example, how often will you meet — and how much would it cost if you had to meet more than usual to mitigate an unforeseen circumstance? Most advisors will review your retirement plan at least once a year.
6 red flags to watch out for
Watch out for these warning signs when shopping for a retirement advisor:
Returns that sound too good to be true. If your advisor is reporting suspiciously few losses, even during market downturns, proceed with caution. It could be the sign that they’re involved in something illicit.
Lack of transparency. Stay away from advisors who are vague on their responsibilities toward their clients, costs and conflicts of interest.
Poor communication. If it’s difficult to get in touch — say, they rarely answer their phone or respond to emails — you might have a difficult time working with this professional even if they are legitimate.
Past legal actions. Think twice about working with a firm or advisor with a history of settlements, defaults, judgments and other legal actions against them.
Lack of professional standards. Advisors who are uncertified and firms that are vague on their professional standards for employees may not be working with your best interests in mind.
High fees. Learn how your advisor’s fees compare to the industry standard and avoid working with those who are far out of range — especially if they don’t appear to be providing extensive services compared to the competition.
FAQ: Retirement planning and financial advisors
Answers to common questions about retirement planning and financial advisors.
Can I get free financial advice?
Yes, you can often get free financial advice from the company that manages your 401(k), your retirement accounts or even a robo-advisor service. However, advice is typically limited and may not help you come up with an exhaustive plan for retirement.
Is there a difference between a financial advisor and adviser?
The only difference between a financial advisor and adviser is style. Some professionals prefer to use the term adviser as a nod to the U.S. Investment Advisers Act of 1940. Others, such as registered investment advisors (RIAs) and investment advisory representatives (IARs) may use the term advisor to reflect the spelling used in their certification.
What's the best way to budget on a fixed retirement income?
There's no one best way to maintaining your finances after retirement, but you'll want to build a savings and spending strategy that fits the money you bring in and how you spend it with the flexibility to absorb life's unexpected curveballs. Get started with our seven steps to budgeting in retirement.
Sources
Average Financial Advisor Fees in 2023 | Everything You Need to Know, Advisory HQ. Accessed July 24, 2024.
Morningstar’s 2023 Annual US Fund Fee Study, Morningstar. Accessed July 24, 2024.
About the writer
Anna Serio-Ali is a trusted lending expert who specializes in consumer and business financing. A former certified commercial loan officer, Anna's written and edited more than a thousand articles to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in Business Insider, CNBC, Nasdaq and ValueWalk, among other publications, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
Article edited by Kelly Suzan Waggoner