Question: I am desperately looking for a financial adviser who is also a registered investment adviser in the state of California. I am three years away from retirement (age 70), and need an expert who will guide me in maintaining my IRAs. Where should I begin and what else should I make sure this adviser can tackle?
Answer: Pros say getting a financial adviser ahead of retirement is a smart move, but you’ll need to be savvy about who you choose. (Looking for a new financial adviser? This free tool can match you to a fiduciary adviser who meets your needs.)
But first, let’s talk about registered investment advisers, or RIAs. These are firms (not individuals) registered with the Securities and Exchange Commission (SEC) or state regulatory agencies that manage individual and institutional investors’ assets as fiduciaries. This means they’re required to put the best interests of their clients ahead of their own —- even though RIA isn’t an earned professional designation like certified financial planner (CFP).
Have an issue with your financial adviser or looking for a new one? Email [email protected].
Now, how do you identify the specific adviser you want? Instead of seeking an adviser to assist you with your IRA investment portfolio, you might consider looking for a CFP who can help you create a detailed written financial plan tailored to your unique situation in addition to managing your investments. A CFP can help you with tax planning, retirement planning, risk management, income and estate planning and more. (The reason that working with a CFP is beneficial is that they’re required to undergo extensive education requirements, thousands of hours of work-related experience and they’re obligated to act as fiduciaries, meaning they have put their client’s best interests ahead of their own.)
Most financial advisers will help manage your IRA and assets, but not all offer comprehensive planning, says Anthony Ferreira, a CFP at WorthPointe Wealth Management. “If you’re looking for a comprehensive planner, I recommend asking if they guide their clients in the following areas: legacy and estate planning, tax awareness and management, risk management and retirement planning,” Ferreira says. “The most important thing you want is to find an adviser who will help you where you feel you need and want guidance.” (Looking for a new financial adviser? This free tool can match you to a fiduciary adviser who meets your needs.)
Having a financial plan is necessary to help guide your financial goals and your investment choices. A financial plan acts as the backbone of your finances and determines how you manage your money today, tomorrow and in the future, explains Alonso Rodriguez Segarra, a CFP at Advise Financial. “Keep in mind that this financial plan should encompass various topics including whether you’re on the right path to a financially independent retirement, budgeting and cash flow strategies, estate planning and tax planning,” Segarra says.
Bri Conn, an investment adviser representative at Childfree Wealth, says you may also want to consider looking for a fee-only adviser. “Fee-only means they will only be paid by you and they receive no referrals or commissions,” says Conn.
Furthermore, says Neela Hummel, a CFP and co-CEO at Abacus Wealth Partners, “make sure the adviser you hire has both the expertise to help you and will put your interests first. I would find three people and interview them to look for a good fit. The service that you get should be more than managing your IRAs, it should also examine your cash planning, tax planning, estate planning and other financial needs.”
Where to find a financial adviser?
While finding an RIA is a prudent step toward securing professional guidance for your retirement planning, Ryan Haiss, a CFP at Flynn Zito Capital Management, says knowing where to start can require a multi-pronged approach. “You can start by seeking recommendations from friends, family or colleagues who have had positive long-term experience with their financial planner,” says Haiss. “Another option would be to search the CFP Board’s Let’s Make a Plan site. If you’re willing, advancements in technology have allowed families to work with a financial planner that isn’t nearby, for instance, our office is located in New York, but we have clients in over 20 states including California.”
Another option is the National Association of Personal Financial Advisors (NAPFA), says Pam Horack, a CFP at Pathfinder Planning. And XY Planning Network might also work. You can also use this free tool from SmartAsset to get matched with an adviser.
Before hiring an adviser, consider asking them these eight questions to ensure that they’re not only able to meet your needs, but that you’re on the same page in terms of communication style, values and fee engagement. Advisers typically work using one of three main fee structures, so it’s important to understand the pros and cons associated with each one, as highlighted in this MarketWatch Picks guide. To choose the best type of adviser for you, consult this MarketWatch Picks guide to what a financial adviser is and how they work with you.
Have an issue with your financial adviser or looking for a new one? Email [email protected].
Questions edited for brevity and clarity.