question: I lost over $200,000 due to mismanagement of my retirement funds by my financial advisor. I’m a single woman with plenty of retirement funds, but now that I’m 75, I have to go back to part-time work. Fortunately, I own my home outright and when my previous advisor asked me to sell it, I refused.
A hornet’s nest has been created trying to find a replacement advisor. It is very difficult to find advisors who are prepared to provide paid advice on an ad hoc basis. I am planning to report my past advisor to the Financial Services Ombudsman, but I am in the middle of trying to sort out the mess I have left and haven’t had time to do it yet. What I learned is that I don’t trust many financial advisors and they are very expensive. How should I proceed?
answer: It’s important to be able to completely trust your advisor, and finding one that makes you feel that way can be difficult. (This free tool allows you to be matched with a financial advisor who may meet your needs.You can also consider a robo-advisor or do it yourself (more on both later).
How to find a reliable financial advisor
One of the things you need to do before seeking a new advisor is define what you want your advisor to do. “Do you want someone to manage your assets, advise you on a comprehensive plan, implement recommendations, etc.? Once you answer these questions, find someone to do it for you.” , says certified financial planner Christina Guglielmetti of Future Perfect Planning.
Having a problem with your financial advisor or looking for a new one? Email picks@marketwatch.com.
Once you know what you’re looking for, you should interview multiple advisors. Start by asking friends and family for recommendations, then check out the CFP Board’s Let’s Make a Plan site or the National Association of Personal Financial Advisors (NAPFA). When vetting an advisor, conduct a background check on the advisor by checking for formal complaints filed with FINRA or by checking the SEC’s Investment Advisor Public Site, where conduct, nominations, and disclosures are available. You should also ask them these 15 questions and ask to speak to past customers.
We recommend working with a Certified Financial Planner (CFP). Not only do CFPs have to meet specific educational requirements and pass exams, but they also have thousands of hours of work-related experience and are required to serve as fiduciaries. Putting the client’s best interests ahead of our own. This minimizes potential conflicts of interest and ensures that you are working with qualified and trained personnel.
Good communication is key with your advisor, and it seems like your last advisor didn’t have that. It certainly feels like something doesn’t add up to your calculations, but I’m not sure how much money you started with or why your advisor didn’t explain more clearly what was going on. “You’re 75 years old and say you have enough money to retire, but you lost $200,000 and had to go back to work. The last year has definitely been a down year for everyone. Yes, and it was certainly difficult to overcome, but when a loss of $200,000 represents a small portion of your assets, what should have happened is to be coached about the possibility and likelihood of loss. “They may have had unrealistic expectations about their portfolio’s performance and had poor communication with their advisor,” says Guglielmetti.
How to find hourly or one-time financial plans
When it’s time to look for a new advisor, don’t look for one who makes more money by putting your money at risk to earn more, says Alonso Rodriguez Segarra, a certified financial planner at Advice Financial. It says that it is recommended. “Instead, get a session with one of his CFPs who charges by the hour to diagnose where you are and what steps to follow,” he says.
Most advisors charge based on an assets under management (AUM) model, while others charge by the hour or run one-time financial plans. Hourly pricing schedules average between $150 and $450 per hour, but one-time plans tend to cost anywhere from $1,500 to $10,000 depending on location and complexity of the situation. there is. To find advisors who operate with a variety of fee models, check out FeeOnlyNetwork.com or the XY Planning Network.
What about robo-advisors and DIY?
You may also want to consider working with a robo-advisor, say the pros. Or maybe you don’t like using a robo-advisor and want a simple strategy that you can manage yourself.
“I recommend reading one of Jack Bogle’s books for retail investors and investing in a combination of S&P 500 index funds and short-term bonds. Interest rates are much higher than they have been in recent years. You might also consider putting your money into a very simple immediate annuity from an insurance company that provides a lifetime income. You only pay out a portion of your assets, rather than a complex fixed index annuity or stock index annuity with high fees. ,” says Jim Hemphill, a certified financial planner with TGS Financial.
At the end of the day, it’s important to understand that a financial advisor cannot prevent losses. “Investing in stocks and bonds can be risky, so you need to make sure your investment portfolio is aligned with your goals. Don’t feel comfortable working with a financial advisor based on past experience. If so, you can consider self-studying and investing in available resources such as books and online courses,” says Ryan Heiss, a certified financial planner with Flynn Zito Capital Management. This route is not a replacement for individual advice, but it can help you make more informed decisions about your investments.
Online courses to consider include Foundational Finance for Strategic Decision Making from Coursera from the University of Michigan, Investments and Portfolio Management from Rice University, and Risk and Retirement Planning from Indiana University.
*Edited question for brevity and clarity.
Having a problem with your financial advisor or looking for a new one? Email picks@marketwatch.com.
