Finding Your First Financial Adviser After 50
It's not too late to connect with a savvy money pro
You’ve heard about financial advisers your whole adult life, professionals who reputedly combined the know-how of accountants with the money wizardry of seasoned investors. So how come you’ve never been to a financial adviser?
The possible reasons are many.
Why People Don't Hire a Financial Adviser
“I think some folks believe they’ll be sold something they don’t need,” said Sterling Raskie, instructor of finance at the University of Illinois Urbana-Champaign. Others, Raskie said, may be apprehensive about dealing with their finances. In addition, “some are afraid a financial adviser might be too expensive, while others may not know where to look for one,” Raskie added.
People put off going to a financial adviser for “the same reason I put off doing my taxes: It’s boring and sometimes painful,” said Taylor Schulte, a Certified Financial Planner and founder of Define Financial in San Diego. “A research group once described financial planning as feeling like a mix between a dental visit, math class and marriage therapy.”
“We often hear something along the lines of, ‘I've made it this far without a financial adviser, why do I need you now?’” Schulte said. “After 30 years of managing their own finances, it's not always easy to turn the keys over.”
What a Financial Adviser Does and Charges
A recent Northwestern Mutual survey found that nearly seven in 10 Americans say they don’t have a trusted money adviser. And almost half (45 percent) don’t know where to get the help they need.
Ready to get a financial adviser? First be sure you understand what a financial adviser is and does. “For some, a quick talk with their broker counts as seeing a financial adviser. I disagree,” said Eve Kaplan of Kaplan Financial Advisers in Berkeley Heights, N.J.
Financial advisers should help you map a money plan based on your goals, discuss asset allocation options for your investments and help keep you on track with your plan. He or she shouldn’t try to predict the market or forecast precise returns on your investments.
Advisers generally charge a flat fee (either hourly or based on the percentage of your assets the adviser handles), earn a commission on products sold or work for some combination of the two. It’s important to decide what compensation arrangement meets your needs and your best interests.
Why People Look for Advisers After 50
A major life event often triggers someone over 50 to call a financial adviser for the first time: a death in the family, a divorce or an inheritance, for example.
The accountant of a retired couple recently referred them to Schulte after the husband’s mother died. “For the first time in their life, they had a seven-figure account balance. Along with cash distributions and retirement accounts, they also inherited fractional shares of both commercial and residential real estate,” he said. “The number of moving parts urged them to contact a professional to be sure they made smart decisions.”
In other cases, impending retirement is reason enough. “After 50, some folks are done funding college and they suddenly realize retirement looms – and perhaps they are woefully unprepared,” Kaplan added.
Bouncing From One Adviser to Another
Rita Jensen, of New York City, first saw a financial adviser a few years ago, after turning 66. “I had just sold my co-op and was flush with cash,” she said. “I wanted expert advice. I didn’t do it before because I was distracted: work, kids and so on.”
But Jensen wasn’t pleased with the firm. “What they really offered was to advise me for all sorts of fees to keep my crucial documents in their vault and then invest my money for me. Which they delegated to another firm. I was underwhelmed.”
Jensen found one adviser at her bank, “a youngish man … I think he churned my account, because it never really grew,” she recalled. “I got annoyed when he and his team couldn’t estimate for me how much my RMDs [required minimum distributions from retirement plans] would be.
Then she had a financial adviser from another bank. That didn’t work out well either. “I just picked her from the phone book because her office was near my office. I kind of liked her, an older woman, and I felt she looked out for me. But a large portion of my savings was in money markets and I didn’t really experience any growth.”
Jensen eventually found what she thinks is reliable adviser — through her niece. “I hope this one works out okay,” she said. “I am so busy that and so poorly informed that I just look at the bottom line once in a while and check that I haven’t lost money and hope I actually gained. But at least my current adviser was able to accurately estimate my RMD.”
Locating Local Financial Advisers
Discount brokerage houses such as Vanguard and Schwab will offer financial advice, but to find a self-employed adviser or small firm you can use your ZIP code to search the sites of the Certified Financial Planner Board or The National Association of Personal Financial Advisors, a group of advisers who charge fees and don’t take commissions on financial products.
Once you have the names of a few potential advisers (you might ask your friends and family for ones they’ve been happy using, too), you’ll next want to vet them to match your comfort level, goals and wallet.
Generally financial advisers hold designations that reveal much about their expertise. For example, a Certified Financial Planner (CFP) designation means the adviser passed requirements of the Certified Financial Planner Board of Standards. A Chartered Financial Consultant (ChFC) designation requires at least three years’ experience in the financial industry before passing finance courses at The American College.
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