Many retirees — perhaps most — have one or more financial advisers. They may include insurance agents, bankers, brokers, financial planners and fee-based investment advisers.
These professionals must all be paid in one form or another. And one way or another, you are the one who pays. Therefore, you have a right to ask — and a right to know — whether or not you are getting your money’s worth.
I’ll focus here on investment advisers, though much of what follows applies to other types of hired financial help.
In my 2012 book, “Get Smart or Get Screwed: How to Select the Best and Get the Most From Your Financial Advisor,” I devoted a chapter to what investors can and should expect from an adviser. This discussion is adapted from that chapter.
I hope you have — or develop — a relationship similar to the one I have with my own adviser. He’s 30 years younger than I am, so he’s likely to be around to take care of my family long after I’m gone. I know I can count on him to manage my investments so I don’t have to worry about them.
Obviously, I have a very high level of confidence in my adviser. I spent many years in the advisory business myself, and I know that he fully deserves it.
But how will you know whether that’s true of your adviser?
As you work with an adviser, consider the following traits. In my opinion, these describe excellence — and they are qualities you should be able to take for granted.
What you should expect from a financial adviser
At a minimum, your adviser should be competent, ethical and willing to put your interests ahead of his own whenever a conflict arises. He should be truthful and honest at all times and should actively earn your trust — not simply assume it.
- Your adviser should make you feel comfortable opening up and sharing everything that’s relevant.
- Your adviser should be able to earn the trust and confidence of your spouse, partner or other family members.
- Your adviser should respect you, your time and your objectives, and be willing to answer questions on any financial topic.
- Your adviser should listen carefully and take your fears, desires and concerns seriously, giving you his full attention during meetings or conversations.
- When your adviser doesn’t know something, he should admit it and work with you to get accurate answers — never make something up.
- Your adviser should treat your confidential information as private and never divulge details about other clients.
- Your adviser should accept your calls even if you don’t have additional money to invest.
- If your adviser makes a mistake, he should inform you promptly and offer to make things right.
- Your adviser should have a competent backup who can step in if he is unavailable.
- Your adviser should help you initiate difficult but important conversations with family members about wills, health care decisions and finances.
- If you experience declining mental capacity, your adviser should help protect you from financial exploitation.
- Your adviser should be mindful of tax implications and help you make tax-efficient decisions, including Roth versus traditional accounts.
- At retirement, your adviser should help you evaluate Social Security and any pension options.
- Your adviser should provide general guidance on accounts he does not directly manage, such as company stock, IRAs and retirement plans.
- If you have aging parents or adult children without advisers, your adviser should help you think through how to guide them.
- Your adviser should review beneficiary designations on retirement accounts to ensure they reflect your wishes.
- When you need expertise beyond his scope, your adviser should refer you to competent, reasonably priced professionals.
- If you are ever unhappy, your adviser should be willing to help you find someone else who will better serve your interests.
This is a long list, and it doesn’t include everything discussed in my book. Still, these are services that many advisers readily provide — often at no additional cost.
If that’s true in your case, your adviser may turn out to be one of the best bargains you’ll ever find.
Richard Buck contributed to this article.