Michael Carignan, CFP®, CRPC®
Have you ever wondered how to get a clear picture of all of your current financial resources and how much retirement savings you need to provide your vision of retirement, taking into account your potential health or market risks? This is just one of many questions people ask when thinking about personal retirement planning. If you find yourself in this boat, there are a number of solutions for you. First, with some time, research and diligence, spreadsheets and off-the-shelf software, you can create your own retirement plan. However, it is likely that if you are asking these questions, you probably don’t have one of those key ingredients to success, or you would already know the answer. A more comforting solution may be to get some professional help. WebMD can help you diagnose some medical conditions, but most people feel better having a trained medical professional give them their expert opinion and recommend a treatment if warranted. In a similar fashion, finding the right financial professional to help you can be a key step in the right direction on your path to financial success.
Just like finding the right doctor is important, (you don’t want to go see your dermatologist if you have a cough) finding the right kind of financial professional can be equally important. There are many financial professionals out there; selecting the right one may be the most important factor in ensuring you have a favorable planning experience. There are some questions you need to ask when looking for a professional to help you construct a retirement plan. The first question should be, “are they qualified to provide the answers I’m looking for?” One good resource in this search is www.letsmakeaplan.org where you can search for a local Certified Financial Planner™.
Most people are more comfortable dealing with a doctor that has the same philosophy on treatment and they personally like. By “same philosophy on treatment,” I mean, do they recommend a diet and exercise regimen, or do they push a diet pill to help lose weight? If you and your doctor disagree on the basic philosophy of medical treatment, you probably will have disappointing results, since you won’t follow his or her advice. In the same way, it is very important to look for a financial professional that has the same general philosophy that you do when it comes to investing and money management. If you believe that it’s possible to outsmart the financial markets and pick the best performing mutual fund or stock next year, then you need to find a broker who believes that as well. If you believe that investing involves taking some prudent risks and adhering to a long term plan with a scientifically designed portfolio, you likely should find a different advisor. Neither philosophy is necessarily wrong, but making sure you select a financial professional that has the same philosophy as you have is of paramount importance to a successful planning relationship.
Some additional specific questions you should ask are:
- Do you prefer fee based or commission based compensation for your advisor?
- Do they have experience with other clients like you?
- Can they advise you on all aspects of your financial life or will you need several advisors to get the answers you need?
- What is the charge for the plan? In most cases, you get what you pay for; if it’s free there is going to be a sales agenda you might not know about right away.
- What is included in the service they provide?
- Will they be able to help you implement planning suggestions? If so, is it a requirement of the planning process? Be careful of the solutions that can only be done through them.
- Do they make “suitable” recommendations or are they a “fiduciary”? (For more information on the difference click here)
Finding a professional that you can understand and trust is critical when choosing to have a retirement plan constructed for you and your family. You are unlikely to follow the advice, good or bad, if you do not trust the person providing the advice. Once you find your ideal fit of personality and capabilities, be ready and willing to provide answers to all of their questions, since a retirement plan is only as good as the information you provide. Don’t hesitate to ask them probing questions and provide honest answers if they ask you some difficult questions. When dealing with the money you have worked so hard to accumulate, stumbling into retirement without a carefully crafted plan can be a dangerous prospect at best. Once your retirement plan is complete, then it becomes time to “work your plan” if you have a few more years, or “live your plan” if you are already retired.
The earlier you start planning for retirement the better, because finding yourself in retirement and unsure if you’ll be able to live it how you’d like is a scary proposition. It has been my experience that those who are most successful in retirement have taken the time to get the advice that helps them sleep well at night, knowing they have done everything they could to create the retirement they wanted for themselves and their family.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP(R), CERTIFIED FINANCIAL PLANNER(tm) and federally registered CFP (with flame logo) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Investment advisory services offered by Paragon Wealth Strategies LLC, a registered investment advisor.
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