Book Appointment

S2E7 - What Type of Advisor Should I Hire to Help Me in Retirement? What should I look for in an advisor?

Season #2

Q: What type of financial advisor have you found to be the most helpful for those on the verge of retirement? (2:11)

A: This is a little bit of a trick question of, you know, when we're thinking about financial advisors and retirement, there's a broad spectrum of people who can help us.

It's important to understand where each of them is coming from so that we can understand the type of advice that they're giving us. Each person has their own perspective and their training that will influence the solutions that they find.

Financial Advisors are Like Hammers!

When we think about financial advisors, I need you to think of this analogy, "to a hammer, everything is a nail." And that has never been truer than financial services in financial services. We have a whole bunch of really amazing people who are super passionate about what they do. And they're super passionate about helping people. And they learn some amazing tools and how it can be used in lots of amazing ways. And then they go out, and they try to apply it to every situation.

The thing is, these tools can be used in every single situation. Now, does that make it the best tool for that situation? No, but it is an amazing tool for that situation, and it can be used that way. And it has been used successfully by lots of people, but that doesn't make it the best tool.

And unfortunately, the financial services industry is. Still, I would say a little immature when you compare it to some other industries in that we don't have standardization. What we call things and what the different roles are of people in our industry.

When you go to, you know, get your taxes done, there's basically two people that you're gonna deal with. You're gonna deal with a tax preparer, or you're gonna deal with a CPA. And in order to become either one of those, there's a set process to become a financial advisor, to call yourself a financial advisor. It doesn't take anything. In fact, in a lot of areas, it's not even a regulated term.

So when you're looking at finding somebody to help you in retirement, you are going to find a huge spectrum.You will find on the one side, people who are like financial coaches, and then on the other end of the spectrum, you will have, you know, these full-service boutique financial advisors, wealth firms that have people working in their office that specialize in all the different specialties, such as retirement planning and the entire gamut in between.

What to look for in an advisor:

So when we're looking for a financial advisor to help us with retirement there, what we're really looking for is:

  1. somebody who we can work with, 
  2. who is experienced in helping people transition into retirement.

And then we need to go shopping because we need to know what it is that we're looking. and we need to find somebody or maybe multiple people who can provide that solution.

Q: Do you need a financial advisor?
A: I think that it's very doable to do it yourself, but I think also if you wanted to. Hire someone, you need to have a basic set of knowledge so that you know who you are hiring and what they're gonna do. And oftentimes, it means hiring multiple people. So how do you find, a good financial advisor?

How to Find a Good Financial Advisor:

So the first thing that you wanna do when you're looking for a financial advisor is you wanna understand how they're compensated is going to be the biggest bias in terms of what they're gonna recommend.

so going back to that hammer analogy, if you are talking to an advisor who all they, the way they get compensated is by selling mutual funds, and they exist. They are always going to find a mutual fund solution. So you need to know that going in that this person, this recommendation you're getting is gonna be mutual funds.

It's kind of like going to a, uh, you know, an ENT and saying my throat hurts. Well, they're gonna tell you that your problem is your throat. And if you go to an allergist, they're gonna tell you, you're probably having an allergic reaction to the pollen. Right.

So, Financial advisors, find out how they're compensated, right?

Find out what their education is because each of them will have different levels of education.

Some are only licensed, and if they only have a license, that literally means that they just passed a hundred-question test. So that doesn't mean that they actually have any formal training in, in your area that you need in retirement. It generally means that they understand somewhat about products.

and then you wanna find out what their values are, what's their outlook in life. What, what's the world view that they view the world as what's that lens? Because maybe they view the world differently than you.

I've worked with a lot of advisors who do not understand how the markets work and they view it as gambling and. Maybe that aligns with you, or maybe that's really against everything that you believe in. So you need to find an advisor whose philosophy and their approach to life match what you want.

Ability To Deliver Results
And that has the technical capability.  and then the actual ability to deliver, right? So you may have an advisor who you philosophically, you believe the same thing and you want, you know, what they say? And they, they, they have the education of being able to create a great retirement plan and great tax plan and great investment plan.

They may have all the credentials, but they're working at a firm that doesn't allow them to implement it. For instance, if someone works at Morgan Stanley or an Edward Jones or a primemerica, or, you know, any one of these companies, they're called captive companies, and they restrict what solutions their advisors can sell.

They only let them provide solutions within their fund family, within their toolbox of solutions. And so it may be very possible that there's a better solution with a different company, but they're not allowed to recommend it. And so you want to know that that bias exists. That doesn't mean that they can't build you a great plan. But they may not be able to build you the best plan, or they may not be able to tell you that it's not the best plan. So you need to understand where those biases are. Um, and, and there are people who are completely independent, but that doesn't mean that they're not biased, right. They may be completely biased against captive people who have restrictions on them.

As an Investor, You Should Be Able to Hold Your Advisor Accountable
So you just wanna, you want to go with your eyes. And I think I've come to the belief that you, as an investor, you, as the person who's hiring these people, you need to have a basic set of knowledge to be able to hire them because you need to hold them accountable. You need to know how to ask the right questions so that, you know, are you, are you being sold something or are you being advised with, you know, with your best interest in mind?

To learn more about how to hire a great financial advisor, check out our free course "How to Hire a Great Financial Advisor."

Or book a call with a Yields for You affiliated advisor.