As a senior, you may be retired and enjoying some well-deserved free time. But, even if you aren’t actively earning more income, that doesn’t mean your expenses have gone away. Financial advisors aren’t for everyone. Financial advisors will cost money, so you should decide whether the extra expense is worth it for you.
As a senior, you may be retired and enjoying some well-deserved free time. But, even if you aren’t actively earning more income, that doesn’t mean your expenses have gone away. Financial advisors aren’t for everyone. Financial advisors will cost money, so you should decide whether the extra expense is worth it for you.
Here are a few helpful tips to keep in mind before you hire a financial planner:
When you need one:
Financial planners are particularly helpful if you have investments, a large inheritance or an annuity. As you age, it may become more difficult to manage your investments. If you plan to leave money to your estate, a financial planner can be very helpful. Financial planning isn’t only for high-income families either. If you struggle to stretch your fixed income, a financial planner could help you create a healthier budget.
You should consider hiring a financial advisor if you have any mutual fund, stock or other investments. Financial advisors can also help you manage tax and estate issues.
Money matters:
There are several different types of “financial planners.” Make sure to keep an eye out for financial planners who make money off of commission. These financial planners act like salespeople more than advisors. If you aren’t interested in purchasing anything, you may want to find another advisor who is more interested in educating you than selling you another product.
You may also consider hiring an advisor that charges you a certain percentage based on how much money they are helping you manage. While they aren’t as likely to sell you anything, their income is based on how much you have invested with them so they won’t encourage spending (even debt repayment) unless you are investing in the market through them.
For more people a financial planner that charges an hourly rate offers the most flexibility. They do not have any interest in your investments (other than helping you maximize your money) and they will likely not try to sell you anything. Hourly advisors are also much more affordable and more willing to help clients who aren’t brushing their teeth with dollar bills.
What to ask:
Financial advisors won’t fit into everyone’s lifestyle. As a senior, you are less likely to need the help of an advisor. If you’ve wisely invested in your retirement, you should be set to live a comfortable life with little to no debt.
If you do opt to hire a financial advisor make sure you ask the right questions to ensure that the advisor your hire has your best interests in mind. A few questions to ask:
• How much of your income comes from fees vs. commission from products you sell?
• How much do you charge per hour?
• What experience, education and licensing do you have?
• Do you (or have you ever) sold limited partnerships, options, futures or commodities? (The correct answer to all of these is no)
• Can you provide client references?
• Will you provide strategies I can implement on my own?
• Can you help with tax/legal issues?
Any advisor you hire should be able to answer all of your questions comfortably. If you feel at all uneasy about an advisor, move on to someone else. Visit our articles section for more topics on personal finance for seniors.
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