Retirement Planning – Should You Hire A Retirement Advisor? Pros & Cons Explained

Retirement Planning – Should You Hire A Retirement Advisor? Pros & Cons Explained

Retirement planning can be a daunting task. With so many options available and potential pitfalls to avoid, it may seem like an overwhelming endeavor to take on alone. This can lead to the question of whether or not you should hire a retirement advisor. There are a variety of pros and cons to consider, and understanding them is the first step toward making the best decision for your future. With this in mind, let’s explore the key factors to consider when deciding whether or not to hire a retirement advisor.

What is a retirement advisor?

A retirement advisor is someone who helps people prepare for retirement by managing their assets and/or providing guidance on their investment decisions.

Retirement advisors can come in a variety of forms, including:

Financial advisors

Financial advisors help people make informed financial decisions, particularly with regard to savings, taxes, debt, and investment.

Registered investment advisors (RIAs)

An RIA is a firm that is registered with the Securities and Exchange Commission (SEC) and is held to a fiduciary standard of care. If an individual is registered with the SEC and held to a fiduciary standard, they are an Investment Advisor Representative or IAR. To act in a fiduciary standard means they must act in your best interest and provide advice based on your specific financial circumstances.

Investment counselors

Investment counselors provide financial advice regarding the investment of funds, but typically don’t manage assets or provide investment management or advice.

What does a retirement advisor do?

A retirement advisor is someone who can help you make the right decisions when it comes to your retirement planning. This includes determining the amount of money you should be saving, deciding which investment vehicles you should be investing in, and setting up your investment vehicles.

A retirement advisor can also help you understand the risks of various investment vehicles and guide you to choose investments that are in line with your risk tolerance. Finally, a retirement advisor may also provide tax guidance and help you determine how much you will need to save per month to reach your retirement goals.

Pros and Cons of Working with a Retirement Advisor

There are many potential upsides to hiring a retirement advisor, including the following:

Specialized knowledge

Retirement advisors have a significant amount of experience and specialized knowledge in the field of retirement planning. This allows them to help you make informed choices, save more money for retirement, and potentially avoid costly mistakes.

Accountability

Hiring a retirement advisor can create a sense of accountability. This can help you stay motivated to work towards your goals and avoid procrastination. Additionally, if you work with a fee-based advisor, a portion of your fees can go towards increasing the amount you have saved for retirement.

Accessibility

Retirement advisors can help you create a personalized roadmap to work towards your retirement goals. This can be particularly helpful if you have a busy work schedule, a large family, or are otherwise busy with life.

Guidance

Retirement advisors can provide helpful guidance on a variety of retirement planning topics, including figuring out how much you should be saving each month and choosing the right investment vehicles.

How to Choose a Retirement Advisor

There are a number of factors to consider when choosing a retirement advisor, including the following:

Experience

You want to make sure your advisor has the experience necessary to help you meet your retirement goals. Ideally, they should have at least five years of experience in the field.

Education

Make sure your advisor has the necessary education to provide quality advice. Ideally, they should be a part of a firm such as a Registered Investment Advisor (RIA) or an Investment Advisor Representative (IAR).

Licenses and credentials

You also want to make sure your advisor is properly licensed or certified to provide the services you need.

Reputation

You want to make sure your advisor has a good reputation in the industry. You can typically find this information by talking to friends and family and checking online review sites.

Fees

You want to make sure your advisor’s fees are reasonable. Ideally, they should charge a fee based on a percentage of your assets, rather than a set fee.

Conclusion

At the end of the day, the decision to hire a retirement advisor is a personal one. While many people benefit from hiring an advisor, it’s important to understand the advantages and disadvantages of doing so before making a decision. With this information in mind, you can decide whether or not hiring a retirement advisor is right for you.