How to Find the Best Financial Advisor When Approaching Retirement

As you get closer to retirement, it’s time to get serious about your money. After a lifetime trying to increase your wealth, you now need to shift your focus to preserving it and generating income.

In decades past, this wasn’t a big deal. To make the switch, you just shifted from stocks into bonds and enjoyed strong interest rates.

In recent years, this has obviously changed.  Thanks to record-low interest rates, achieving a reasonable return without excessive risk is not easy at all.  In fact, it is very difficult. 

This is where a financial advisor can help.  An experienced professional can help you create a plan to generate income and help you maintain your desired lifestyle no matter where the market or economy goes.

Unfortunately not all financial advisors are alike.  There are many excellent advisors who will work diligently to help you create a realistic plan and protect your assets from excessive risk.  On the other hand, there are also many advisors who are more trend followers than risk managers.  That may be something you can live with early on, but this can be a significant risk for those with less time to recover from setbacks.

If you’re working with one of those advisors, things look rosy when the entire market is going up…like right now, since the US market has gone up for 8 years straight.  But think back to 2008 and 2009.  It is only at these times that many find out if their advisor was helping them manage risk or primarily just following the market.

This can be an expensive lesson.  After 2008 many people had to postpone retirement.

Many people also left their advisors, unhappy that they didn’t protect them on the downside.  So this is why it is extremely important to pick your advisor VERY carefully.

When you’re nearing retirement, you need a professional who will help you manage risk so that your future is secured no matter where the economy or market goes.

Of course, there’s no free lunch.  You can’t have the high returns of being invested in a bull market and be protected on the downside at the same time.  You’ll need to give up some of the potential gains in exchange for dialing down the risk.  But when you’re close to retirement, this is what can make it easier to sleep well at night.

On the other side of the spectrum, many people decide it’s hard to find a professional you can trust so determine it’s better to do it yourself.  Usually, that’s a big mistake.  Just like with your medical needs, do you consider do-it-yourself surgery?  For whatever reason, our society thinks it’s okay to DIY on money, but the fact is that most people try to do that, and at the same time, most Americans don’t have enough saved for retirement.  Money management is not easy, and that’s why there’s financial professionals who study this all their lives.  Getting help is the smartest thing you can do.

However what’s vital is that you get the right help. Here’s some tips to find the best possible advisor to help you in your pre-retirement and retirement years.

  1. Look for advisors with broad experience in retirement planning and income generation. If you’ve got an inner ear issue, you don’t want to see a family doctor or a podiatrist.  You want a specialist.  Same with retirement:  you want someone very well versed in generating income for retirement while managing risks.  Who is qualified?  Look for Certified Financial Planners and others with strong planning backgrounds, and ask how many retired clients they work with.  The more they do it the better they’ll usually be at it.
  2. Know the difference between a broker and a true financial advisor. A broker is technically a product salesperson and only has to give you advice that is “suitable to you”, even if it means steering you into higher cost products.  A true financial advisor, however, serves as a “fiduciary”, meaning he or she legally must always put your interests in front of their own.
  3. Be sure to check with the regulatory agencies to make sure the advisors you’re considering have clean records. See
  4. Look for advisors who work with clients in similar situations to you. These days, there are advisors who specialize in helping people from all walks of life…teachers, physicians, municipal employees, business owners, executives, high net worth individuals, etc.  You’ll usually get the best result by looking for someone who work with clients like you, since they’ll be familiar with a lot of challenges you face.
  5. Ask a lot of questions. A good advisor welcomes questions and should be able to communicate effectively with you.  Avoid those who don’t welcome your questions—the best advisors want an engaged client.

Is it easy?  Not exactly, it takes time to interview and research potential advisors.  But since your future is at stake, don’t cut corners.  Fortunately, there are some shortcuts and free resources that can help.  There are independent advisor rating services such as the Paladin Registry that provide free screening of fiduciary advisors.  Just answer a few questions and they will match you up with local advisors who have been vetted and meet their stringent requirements.  This can save you time in finding a few advisors to consider that are already pre-screened.

Once you do find someone you like, don’t sit back and relax.  It’s important that you stay very involved.  It’s your money after all.  No one will ever watch it as closely as you do.  Be sure to review your statements every month, and always ask questions if you don’t understand how your money is being managed.

Whatever you do, avoid falling into the trap that “I can do it better myself”.  Money is different.  Money is emotional.  Things seem easy when the market has been going up and probably has more risk than ever.  Unless you’ve studied the markets professionally for years, we all do better with an objective expert beside us helping us to make the right decisions.

Jeanne Klimowski is Founder of Wavelength Financial Content Inc., a provider of employee financial wellness programs and digital content for financial advisors. 

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