Part 1: 3 Things to Know Before Choosing a Financial Advisor

Choosing a financial advisor who helps you make retirement decisions is important as retirement approaches. You have the rest of your life ahead of you, and after spending 35 years building your retirement savings, it's time to turn those savings into your retirement income. But how do you know who to trust with this crucial task?

I believe three things can help you find and choose a financial advisor who can help prepare you for, and guide you throughout, your retirement.

1. Fiduciary: What does that mean?

Retirees often ask potential advisors, “Are you a fiduciary?” However, they really should be asking, “Are you acting as a fiduciary to me?” A fiduciary, for the purpose of investment advice, is defined as someone who has the duty to provide advice and monitoring of client’s accounts. They are also legally bound to put their client’s best interests ahead of their own.

Later, I will discuss the difference between brokerage and investment advisory relationships. An investment advisor may also be registered as a broker, so depending on your agreement with them, they may or may not be a fiduciary to you.

This can be confusing, mainly because there are two different government agencies that regulate different types of financial advisors. However, it's crucial to find out if the financial advisor is obligated to act in your best interests.

Follow these guidelines to help figure out whether an advisor will be acting as a fiduciary for you:

- Ask your advisor if they are a broker, investment advisor, or both.

- If they are a broker only, they work on anon-fiduciary basis in a commission-based, transaction by transaction brokerage relationship. You are entitled to recommendations in your best interest.

- If they are an investment advisor only, they act as a fiduciary while providing investment advice in a financial planning or advisory account relationship.

- If they are both, they will be able to manage your investments and give financial adviser as a fiduciary, and they will also be able to give advice on life insurance or guaranteed income investments.

The most important thing is to understand who you are working with and how they are compensated in your relationship. Call (800)895-6625 or click here to schedule a meeting today.