What Fee-Only Retirement Advice Should Include

Choosing a financial adviser is a big decision, especially as retirement gets closer. Advisers work differently depending on their licensing and how they’re paid, and no one type is right for everyone.

If advice with fewer conflicts of interest matters most to you, a fee-only fiduciary adviser may be a good fit.

This blog post will cover what a fee-only fiduciary adviser is and what you could expect working with one, so you can feel confident in your financial adviser selection.

Key Takeaways:

• A fee-only adviser is paid only by you, through a flat fee, hourly rate, or percentage of the assets they manage. They don’t earn commissions for selling financial products.
• Fiduciary advisers are legally required to put your interests first, and most fee-only advisers are fiduciaries. Still, it’s worth confirming both.
• Good fee-only retirement advice should be personal, transparent about costs, and cover more than just your investments.

What is a Fiduciary?

A fiduciary adviser is someone who is legally required to put your interests ahead of their own when giving advice or managing your money. SEC-registered investment advisers, such as Advance Capital Management, are regulated under the Investment Advisers Act of 1940. This act binds RIAs to the fiduciary standard.

Essentially, fiduciary advisers are obligated by law to:

• Serve the client’s best interest at all times
• Act in utmost good faith
• Act prudently, with the care, skill, and judgment of a professional
• Eliminate conflicts or fully disclose them so you can make an informed decision
• Disclose all material facts

Not all financial advisers are held to fiduciary standards, so it’s very important to do your research on any adviser’s licensing and accreditations. See our blog post here to learn about the different types of financial advisers.

How Does Fee-Only Advising Work?

Fee-only advisers are paid only by their clients, whether through a flat fee, an hourly rate, or a percentage of the assets they manage. This also means fee-only advisers do not receive any commissions, sales incentives, kickbacks or referral fees from selling policies, mutual funds, annuities, or other financial products.

In contrast, commission-based advisers are paid by the companies whose products they sell..

Watch out for the term “fee-based.” It sounds similar, but fee-based advisers can charge you a fee and earn commissions on products they sell. If you’re not sure which one you’re talking to, ask: “Do you receive any compensation from anyone other than me?”

Characteristics of Fee-Only Retirement Advice

When working with a fiduciary adviser affiliated with a fee-only firm, their advice should include the following elements:

• Aligned to your specific short- and long-term goals: A strategy that’s right for one person isn’t always right for someone else. Rather than one-size-fits-all advice, your recommendations should be tailored around what works best for your unique goals and situation.
• Clear, written fees: You should know exactly what you’re paying and how it’s calculated before you sign anything. Registered advisers generally must provide a disclosure document (Form ADV Part 2A) that spells this out. You can look up any adviser’s Form ADV here.
• The whole retirement picture: Good retirement advice goes beyond picking investments. It should cover when to claim Social Security, how to draw income tax-efficiently, and big one-time decisions like whether to take a pension as a lump sum or monthly payments.
• Ongoing check-ins: Your adviser should meet with you regularly to review your progress and adjust for life changes, and keep an eye on your plan between meetings.
• Pressure-free: You make the final call. A good adviser will tell you what they’d recommend and why, but you should never feel pushed into a decision.

Bottom Line

The right adviser for you depends on what you value. One simple question can help you find advice with fewer conflicts of interest: how does the adviser get paid?

Ask it of everyone you meet and compare the answers.

To help make the process of finding an adviser easier, we’ve created a ‘Choosing a Financial Adviser Checklist’ with key questions to ask while you are comparing advisers, services, fee structures and areas of expertise. Click here to download your copy.

And if you’d like to consider us in the running to be your financial adviser, you can click here to schedule a consultation with one of our advisers.