Financial Security in retirement: How can we ensure that our advisor acts in our best interest?

Retirement marks the end of a life stage characterized by work and the fulfillment of specific social roles. However, it also represents the beginning of a new chapter, full of possibilities and opportunities to redefine our identity and our life projects. But does an advisor always act towards this?

That is why retirement is much more than the cessation of work activity. It is a moment of transition and transformation that invites us to reflect on our life, our values and our future projects. The way we face this new stage will depend on individual, social and cultural factors.

Now, we all know that if we have spent our lives working, the minimum we dream of is a retirement that is characterized by financial stability. That is why the importance of taking care of our money in retirement is a crucial issue that goes beyond simple financial management.

Some of the challenges we have at this stage are:

Variable income:

In retirement, income is usually more variable than during working life. Therefore, it is important to carefully plan our expenses and create a realistic budget.

Inflation:

The purchasing power of money decreases over time due to inflation. It is essential to take this into account when planning our retirement savings.

Unforeseen Expenses:

Health, long-term care, or unexpected situations can lead to unexpected expenses. Having an emergency fund is essential to deal with these situations.

As a financial advisor focused on my clients’ retirement, I have seen for years different profiles, situations and specific cases. However, it is known that there are those who have the knowledge and different tools to manage their portfolio, before and during retirement, therefore, they know the financial field of retirement well.

However, there are also people who have worked their entire lives in their area of expertise and have not had the opportunity to train in an aspect that will allow them to better manage their finances in their golden years.

Now, the area of financial advice is made up of professionals who, for much of their lives, have dedicated themselves to studying the actions necessary to manage assets in the best possible way, so that they are capable of providing autonomy. , independence, quality of life, security and peace of mind for those who have worked it for years.

However, the world of finance is like any area of knowledge. There are those who complete undergraduate degrees in economics, postgraduate degrees in banking and finance, master’s degrees in investment, and even specializations in financial planning. Thus, it is necessary that when hiring a financial advisor, you review their studies, their background and their experience, so that you can discover if they adapt to what you need or not.

The best strategy before hiring a financial advisor is not to stick with the first one you meet. But rather to ask for a short appointment with several of them. So that you can ask them questions about their experience, their studies, their rates, if they charge for commissions for the products you recommend and other things.

To be a little more sure, it is important to verify the advisor’s professional information through the BrokerCheck by FINRA page. This allows them to confirm the credentials of advisors, firms and brokerage companies.

How do I know if my Financial Advisor is acting in my best interest?

The first thing you should keep in mind is that the most important thing is to trust the advisor you choose. Because it is worthless that he has all the characteristics and specializations that you are looking for, if his attitude and the way he talks to you about your portfolio does not give you the level of confidence that you think you should have in him. It won’t work.

Now, to trust him, in addition to asking the questions that I left you in the previous paragraphs, you must ask yourself the following:

• Has my advisor helped me define clear financial objectives? Do we both understand what the objectives are that we want to achieve with my portfolio?

• Does my advisor perform a periodic review of my financial plan? Or do we stop talking for a long time? Do you only talk to me when you want to offer me an investment product?

• Do you charge commissions for these products you offer me?

• Do these commissions influence your recommendation? Do you show empathy for my needs and concerns? Or do you get upset when I say no to one of your products?

Before hiring a Financial Advisor, you should be sure that they are a fiduciary. How can you know?

-Ask directly:

The easiest way is to ask your advisor directly if they have a fiduciary obligation. If they say yes, ask them to show you the documentation that supports it.

-Review the contract:

Carefully read the contract you signed with your advisor. There you must clearly specify if you have a fiduciary obligation to you.

-Look for certifications:

Some advisors have specific certifications that demonstrate their commitment to acting in the best interest of their clients. For example, in the United States, CFP (Certified Financial Planner) certification implies a high standard of ethics and professionalism.

-Commission vs. Fees:

Fiduciary advisors typically charge fees for their services rather than commissions for the products they sell. This reduces conflicts of interest, since the advisor does not make more money if he sells you a particular product.

-Transparency:

A fiduciary advisor will be transparent with you about the costs, risks and benefits of the recommendations they make to you.

Why is it important for your advisor to be a fiduciary?

– Protection of your interests:

A fiduciary advisor will help you make informed financial decisions and protect your assets.

– Trust:

Knowing that your advisor is working in your best interest will allow you to establish a long-term relationship of trust.

– Avoid conflicts of interest:

Fiduciary advisors have less incentive to recommend products that are not the best fit for you.

In short, it is essential that your financial advisor be a fiduciary to ensure that your interests are protected. If you have questions, do not hesitate to seek a second opinion or consult an attorney.

To seek a second opinion, without having to hire an expert to manage your portfolio, you can hire an Hourly Financial Planner, which would be of great help if you consider that you have questions to ask, and want guidance from someone who has great experience. and can tell you, based on your results, if your portfolio management has been the best, or if, on the contrary, you should consider other advisors.

Hourly Financial Planning is a window of opportunities for those people who do not need a hand to manage their portfolio but rather need a guide to tell them how they are going in planning their finances in the short, medium and long term. if their habits are being the best, and if there is any aspect that they are not observing.

What are its advantages and what makes it different from portfolio management?

• Flexibility: You can hire the advisor only when you need it, without the obligation to pay for services that you do not require.

• Accessibility: It is a cheaper option for those who have specific needs or a limited budget.

• Personalization: You can adapt the services to your specific needs, avoiding paying for aspects that do not interest you.

• No long-term commitment: You are not obligated to maintain a long-term relationship with the advisor, which gives you greater freedom.

• Clarity in costs: You will know exactly how much you will pay for each hour of service, avoiding unpleasant surprises on the bill.

• Greater control: You have greater control over the financial planning process, since you can choose the topics you want to address in each session.

When our main goal is to have a peaceful and financially stable retirement, we must start by feeling that we are doing things right. Therefore, making the decision to hire a financial advisor we trust, or an hourly financial planner, to guide us through the process is one of the best strategies we can take for our future.

The topics you could cover in an hourly financial planning session could be:

Budget:

• Creating a realistic budget

• Identification of areas where you can reduce expenses

• Setting savings goals

Debts:

• Strategies to pay debts faster

• Debt consolidation

• Interest rate negotiation

Savings and investment:

• Establishing short and long-term savings goals

• Selection of suitable investment products

• Portfolio Diversification

Retirement:

• Calculating the savings needed for retirement

• Retirement Product Selection

• Retirement Income Planning

Taxes:

• Strategies to minimize taxes

• Long-term tax planning

Insurance:

• Evaluation of existing insurance coverage

• Identification of gaps in coverage

• Selection of new insurance

Real estate:

• Buying or selling a property

• Real estate investment

• Real Estate Estate Planning

Emergency:

• Creating an emergency fund

• Planning for unexpected events

Financial education:

• Explanation of basic financial concepts

• Developing healthy financial habits

Remember The duration is for the hours you want, so it is important to prioritize the most important topics for you. You can use this time to get answers to your most pressing questions or to receive guidance on a specific topic.

Before the session:

• Define your objectives: What do you want to achieve with this session? Resolve a specific question? Create a budget? Planning your retirement? Being clear about your objectives will help you focus the conversation.

• Gather your financial information: Gather all your important financial documents, such as bank statements, investment account statements, insurance, etc. This will make it easier for the advisor to have a complete view of your situation.

• Make a list of questions: Anticipate the questions you want to ask the advisor. This will help you make the most of your time and ensure that you leave the session with all your questions answered.

During the session:

• Be clear and concise: Explain your objectives clearly and concisely. The more specific you are, the better the advisor will be able to help you.

• Listen carefully: Pay attention to the advisor’s explanations and do not hesitate to ask for clarification if something is not clear to you.

• Take notes: Write down the key points of the conversation, the advisor’s recommendations, and next actions to take.

• Don’t be afraid to ask: If you have any questions, don’t hesitate to ask. The advisor is there to help you.

After the session:

• Review your notes: Review the notes you took during the session to make sure you understood everything correctly.

• Implement recommendations: Put the advisor’s recommendations into practice as soon as possible.

• Schedule a new session (if necessary): If you need more help or if new questions arise, do not hesitate to schedule a new session.

Additional Tips:

• Be honest: It is important that you be honest with the advisor about your financial situation. This will allow them to provide you with more precise and personalized advice.

• Be proactive: Don’t just answer the advisor’s questions. Be proactive and raise your own concerns.

• Be patient: Financial planning is a process that requires time and effort. Don’t expect immediate results.

By following these tips, you’ll be able to get the most out of your hourly financial planning sessions and make better decisions about your financial future and retirement.

Although citizens in the United States still face challenges in saving enough for their retirement, due to factors such as the rising cost of living, student debt and job instability, awareness of the importance of planning for retirement has increased in recent years. retirement, thanks to educational campaigns and changes in regulations.

An interesting fact is that Millennials and Generation Z tend to be more aware of the need to plan for their retirement than previous generations.

Alonso Rodriguez Segarra – CERTIFIED  FINANCIAL PLANNER™

Which provides hourly, fee-only, and fiduciary financial planning services. He has over 20 years of experience in the financial world and has been named among the Top 100 Financial Advisors in the US by Investopedia.

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Note: The comments given in this guide are for educational purposes only. Before    making a financial decision, consult your financial advisor or conduct appropriate research. Remember that historical results are not a guarantee of future returns. In    the comments provided, this guide does not consider tax impacts. Always consult your particular case with a specialist. We are not your financial advisor, so             remember that each case differs.

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All rights to this guide are reserved, and the occasional mention of third-party brand names is made solely for educational and reference purposes, without any interest in financial gain. This information is for educational purposes only and does not represent an offer of products or services.