Ask: I retired at age 62 and I live on a pension and social security. I have an IRA but have not withdrawn from it. I’ve been my own planner until now. What can a financial planner do for me? (Looking for a new financial advisor too? This tool can help you find an advisor who might fit your needs.)
Answers: A financial planner can give you peace of mind and helpful advice, but all of that comes at a cost. And whether that cost is worth it isn’t as simple as a yes or a no: You’ll have to weigh up how much you want and need help with how much you’re paying for it.
How can a financial advisor help you?
An advisor can help with everything social security timing; towards an overarching investment strategy; to creating a holistic financial plan that will help you save your money in retirement; to how and when you withdraw money from your IRA (and the tax implications). “Retirement distribution strategies are some of the most valuable play that we as planners can provide,” says certified financial planner Chad Holmes of Formula Wealth. (Looking for a new financial advisor? This tool can help you find an advisor who might meet your needs.)
Good planners also do more than just crunch numbers. They listen to a client’s “needs, goals, aspirations and fears” and then “take a financial inventory of their situation and develop methods to enable them to live an inspired and quality life,” says certified financial planner Mark Paller from Paller Financial. Certified financial planners can also outline the financial methods, processes, and products to tilt the odds of success in their client’s favor. “We consider tax laws, real estate, economics, markets, interest rates, cash flow and insurance needs,” says Paller.
An advisor can also reassure you. Navigating a stock bear market, one of the worst bond environments in decades, inflation unlike anything we’ve seen in 40 years, skyrocketing interest rates and an aggressive Fed is difficult at best. “This can be a tough environment for both equities and fixed income,” said certified financial planner Rockie Zeigler III of RP Zeigler Investment Services. “Ideally, a good financial planner can help you by selecting investments that reflect your risk tolerance and objectives. As important as investment selection in this situation is investor behavior, your behavior,” says Zeigler.
That said, the reality is that you may not need a planner at all. Would you like to do all this yourself? Or, if you don’t right now, maybe you’d like to use some of your spare time to learn more about this? Many Americans are retiring smartly without paying for any financial aid (more on what it costs below), and if you think you have the time and the knowledge to do this yourself, do it. (Looking for a financial advisor too? This tool can help you find an advisor who might meet your needs.)
What can a financial advisor cost?
There are different types of financial planners and different costs involved. Some will create a one-time financial plan for you, which you can then follow for years to come; depending on complexity, clients can expect to pay between $3,000 and $7,500 for a one-time comprehensive plan, according to Midtown Financial Group certified financial planner Grace Yung.
If you want to enlist someone to help with questions that come to mind, a scheduler that charges by the hour can make sense. Hourly rates also vary, with margin ranges between $200 and $500 per hour. “Sometimes it helps to have a supportive partner or second look at your work,” says certified financial planner Jay Zigmont of Childfree Wealth about this type of financial planner.
If you want someone to manage your investments for you, the AUM (assets under management) model is a common way, with advisors typically charging around 1% of assets under management. Please note that fees are generally negotiable in all of these cases. (Looking for a financial advisor too? This tool can help you find an advisor who might meet your needs.)
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