Even for a conscientious investor, the task of planning for retirement can be daunting. Most people find it difficult to wrap their minds around their financial future. Intellectually, we understand the importance of long-term financial planning, but too often, our present day concerns take priority. This can be just as true for people already employing a financial advisor as for those who don't. “Did I forget to consider something? How do I structure my retirement to reflect changing circumstances and goals over time?” are some of the questions an investor may have. That's why it's especially important for investors and their advisers to forge a collaborative relationship, and even more so for couples, because the number of factors to consider doubles.

Vetting Your Advisor

First, it's important to vet your financial advisor, even if they have been recommended by family or friends. Find out about their fee structure and how their paid, as well as their certification and licensing. Find out what their education is. Check Financial Industry Regulatory Authority's (Finra) BrokerCheck for their profile and whether the have any enforcement actions. (For more tips, see 5 Questions To Ask Your Potential Financial Advisor.)

Make It a Collaboration

Most importantly, look for a financial advisor who employs a collaborative approach. Such an advisor will assess your spending habits, goals and risk tolerance, and create a financial plan tailored to your specific needs, while keeping you involved in the planning process every step of the way. Ask how and how often they prefer to communicate. Do they schedule regular meetings? Do they insist that both halves of a couple are fully involved in planning? A collaborative financial advisor will ask you questions and really listen to the answers. They will pay close attention to your specific circumstances and be willing to discuss your investment philosophy.

Be sure to level with your advisor. Be realistic about your spending habits, for instance. Do you need to budget for vacation travel or luxury items? What are your bottom-line goals, and what are your wishes? A collaborative financial advisor will help you prioritize your goals and come up with solutions you may not have considered before. Also make sure to disclose all assets to your advisor. A complete set of data is crucial in financial planning. (For more, see How To Select A Financial Advisor and 5 Facts Financial Advisors Wish You Knew.)

Important Tools

Find out what kind of technology an advisor utilizes; that can illustrate how technically adept they are and how well they communicate. Two popular ones are Instream Solutions and MoneyGuidePro, which help synthesize the information investors provide, creating graphics that help visualize a plan. As the financial advisor and the investor make adjustments, the investor is able to picture how these adjustments affect his or her portfolio. What happens over time if you adjust your monthly spending, for instance? If you're a business owner, should you consider selling your business, and when? Does it make sense to push back retirement? The investor can see the answers to these questions and track the changes immediately on their screen.

The Bottom Line

Like most things in life, the effort and thought you put into any endeavor will determine what you get out of it. Maximizing the benefit of utilizing a financial advisors means taking a collaborative approach highlighted by being honest about assets and liabilites and communicating expectations. Only then can your advisor help you formulate a realistic plan that reflects your priorities and long-term goals.

Related Articles
  1. Retirement

    Why Caregivers Should Enlist A Financial Advisor

    Stressed caregivers in need of help managing their loved one's affairs should consider enlisting a financial advisor.
  2. Professionals

    How To Select A Financial Advisor

    Understanding one's own needs and what different advisors do are critical elements in the selection process.
  3. Professionals

    5 Facts Financial Advisors Wish You Knew

    These finance professionals have different titles and areas of expertise. Find out what you should know before you consult a financial advisor.
  4. Brokers

    Choosing A Financial Advisor: Suitability Vs. Fiduciary Standards

    Discover the differences between the Suitability and Fiduciary Standards when hiring a financial advisor.
  5. Personal Finance

    5 Questions To Ask Your Potential Financial Advisor

    If you are looking for a financial advisor, you'll need to know the questions to ask in order to fully understand your financial situation and plan.
  6. Retirement

    Suddenly Pushed into Retirement, How to Handle the Transition

    Adjusting to retirement can be challenging, but when it happens unexpectedly it can be downright difficult. Thankfully there are ways to successfully transition.
  7. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  8. Retirement

    Two Heads Are Better Than One With Your Finances

    We discuss the advantages of seeking professional help when it comes to managing our retirement account.
  9. Retirement

    5 Secrets You Didn’t Know About Traditional IRAs

    A traditional IRA gives you complete control over your contributions, and offers a nice complement to an employer-provided savings plan.
  10. Retirement

    Is Working Longer A Viable Retirement Plan?

    Fully funding someone’s life for three decades without work is tricky. The result is retirement has become, for many, a 30-year adventure.
  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  3. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  4. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  5. Can catch-up contributions be matched?

    Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>
  6. Are catch-up contributions included in actual deferral percentage (ADP) testing?

    Though the Internal Revenue Service (IRS) carefully scrutinizes the contributions of highly compensated employees (HCEs) ... Read Full Answer >>

You May Also Like

Trading Center