A little something many people don't think about until they are knee deep is that choosing a financial advisor goes against all of our decision making. When you buy a car, you naturally take it for a test drive. When you hire a contractor to do some work, you look at previous jobs they have done. But, when looking to hire a financial advisor, you are asked to trust them with your hard earned savings after chatting with someone for an hour or two and possibly reading their credentials, that you may or may not comprehend, on the internet.

I watched my neighbor, Jim, get wrapped up in this process last spring. Jim is fifty-eight and is looking to retire at sixty-two. He approached it no differently than his search for a new lawnmower. He found an advisor, who just so happened to be friend's friend's brother, and proceeded through one meeting to sign the document requesting Jim's funds. Six months later Jim received contact from a different acquaintance who was in the financial field and let him know his "advisor" was putting him into funds with expense ratios that were charging him 2% of his returns annually. That does not sound like a lot, and it's probably not something anyone celebrates, but over the possible twenty year retirement that could easily amount to hundreds of thousands of dollars.

After all of that Jim learned an expensive lesson: the hard work is done before us ask someone to shake our hand. So where do you start? You get an understanding of what you need, specifically in your life. And now, not what your advisor thinks what you need, not what your golfing buddy and his advisor do, and not even what is recommended for your situation.

Are you someone that literally sweats at night worrying about what the market is doing now? You need a financial advisor that is communicative and supportive who will check in and not go silent when the Dow Jones drops 500 points. Are you someone that is entitled to a pension with multiple payout options? Do you just recently received a second lump-sum or payout options from a previous employer or job? You want someone who has experience with pension maximization strategies, not someone who worked only with people who have saved in 401(k)s for most of their lives.

The size of your portfolio is more critical than anyone would like to admit. If you have $200,000 saved, a well-known firm is not going to give you the same level of service as a $2 million account holder. This is not a judgement, it's math. A lot of advisors, especially those at bigger firms, have minimum account sizes, and even if they do not, advisors will tend to spend more effort with clients who are more than just a lower asset client. This should not suggest that you should give up hope when your nest egg is smaller, it just means you should be looking for advisors with expertise to your sector. Perhaps a fee-only planner who is paid hourly rather than managing money.

The Credentials Maze and What Actually Matters

If you happen to walk in any financial advisor's office, you see, and will be hit with an alphabet soup of letters behind their name, CFP, CFA, ChFC, CLU, RICP, and possibly more you've never heard of. Some of these credential letters matter, some of these are certifications you can get over a weekend and maybe only require having some sort of a license, that really do not mean anything.

CFP - Certified Financial Planner, is the gold standard for full financial planning. This designation has a process and required elements built into it. It requires a work and full educational component, reallity forced continuing education, years of work, a hard test to be ascerted during test conditions. The credential means you have done the work.

A CFA - Chartered Financial Analyst, is very rigorous too, and while it has some consideration for financial planning it's mostly more for investment assessing, and investing for asset management. If your advisor has both, than they really worked hard at getting credentials.

However, here is what matters more than the letters: how long have they worked specifically with clients who are retired? Because retirement planning is much different than helping thirty something's save for a home, the questions are different, the stakes are different, and you cannot afford a twenty year recovery time frame if things go wrong at retirement.

Ask them: how many clients do you have who are retired already? What age group do they serve? How many have a similar stage of life as I am in?

I once met with an advisor who had perfect credentials, but had been in practice for three years and had only clients who were still accumulating assets, so that was never good. He was a nice guy, a smart guy, but had never had to help someone actually live off a portfolio through down markets. That experience of talking someone away from selling everything when their account is down 30% is far better than any designation. You want someone that has gone through at least one full market cycle with retired clients, who have witnessed panic and helped their clients through that panic.

So the First Meeting: What Should I Walk Away With

Your first meeting with an advisor is not a sales meeting. You should walk away if you sense you are sitting in front of a salesperson. You should spend the first meeting basically being interviewed as much as them interviewing you.

A good advisor will dig into your life in ways that are uncomfortable to discuss at first. They'll want to know your relationship with money as a kid. If your spouse spends in the same ways as you or if that is a point of contention in your relationship. What happened to your parents in retirement — did they run out of money? Did one of them have a long and expensive final illness?

These are not small talk questions. They are significant. Your money story has been built over decades, with influences from your first job, your worst money mistake, and everything in between. A financial advisor that doesn't understand your unique context will build a plan on shifting sand. The advisor may have developed a nice and pretty optimal withdrawal strategy, but if it does not include that you saw your father lose everything in a bad investment and you vowed never to take risks...that plan is worthless.

You should also walk out of that initial meeting with homework. A true financial advisor will ask you to collect tax returns, statements, insurance policies, estate documents, etc. This is good. It means they are not going to wing it. They really are going to determine your financial status with eyes wide open, before proposing anything. If an advisor offers to begin managing your money after one conversation and an exchange of a handshake, that is a red flag the size of Texas.

Pay attention to what the advisor is saying about returns. If a financial planner promises you certain return numbers they are either lying or delusional. The market does not work that way, and retirement planning is not about hitting home runs anyway, it's about not striking out. If they are talking about "beating the market" and "maximizing returns," be cautious, because you should actually be hearing about risk adjusted returns, downside protection, and planning for the unexpected. An advisor who shares a story about helping a client avoid a catastrophe is potentially more valuable than one who reminds you how they picked a certain stock that doubled.

The Discomforting Reality about Fees

Let's discuss money now, which is where many people get uncomfortable and tend to make erroneous decisions simply because of that discomfort. Financial advisors cost money. This isn't necessarily bad—so do physicians, and we don't try to treat our own heart disease—but you need to know why they cost money, and how much are you really spending?

The typical charge is 1% of assets under management. If you have a million dollar portfolio, that amounts to $10,000 per year, and repeat that every single year, for a long period of time. Over a thirty year period of retirement, you would be surprised how much money adds up. The issue isn't whether that's a lot (it is), as much as whether it's worth that much to you. Are they saving you more thant the $10,000 you spent in mistakes not made? Are they giving you peace of mind worth that price? Are they structuring your tax situation in a way that saves you multiples of what you paid?

The sneaky part about this is at 1% it doesn't feel like $10,000, because it comes out of your account directly. You don't ever write a check, so it doesn't sting the same. But, this is money out of your retirement fund.

Some consultants are worth every cent of it. Others are general glorified robo-advisors who will put you in a target-date fund, and call you twice a year.

Cheaper isn't always better either. I know someone who hired an advisor at 0.5% - half of what you would normally find. Sounds great, right? Except, this advisor had 400 clients. She was lucky to get 3 meetings a year, none longer than 30 minutes. When she called with a question on tax-loss harvesting, it took a week to get a call-back. So, she was paying less, but also got less. Sometimes that 1% to an advisor that knows the name of your kids and calls you when they see something that could affect your plan is worth more than that 0.5% to the advisor who has to look you up in their CRM to remember anything about you at all.

There are also flat-fee advisors, which might charge $3,000, $5,000, maybe $10,000 a year, regardless of the size of your assets. This can be a fantastic deal if you have a lot of money, but could feel pricey if your total nest-egg is smaller.

There are also hourly advisors, that might charge $200-$400 an hour to conduct a review of your plan, answer questions, and maybe provide some guidance, but will not handle ongoing management for you. This could certainly work, if you are organized and disciplined enough to actually stay on top of the day to day stuff yourself!

The key is understanding not just what you are paying, but what it includes. How often do you meet? Can you call with questions and not get charged for it or is there an additional fee? Do they prepare your taxes or coordinate with your CPA? Will they assist you in insurance reviews? Will you be paying for future updates of the financial plan? Get all of this in writing before you sign!

The Spouse Question and Why it Matters More Than You Think

Here is a scenario that happens more often than probably think: A couple comes in for the first appointment to meet with a financial advisor. One of them has managed the finances of this couple for the entirety of their marriage - let's call this person Tom. Tom is familiar with every account, every investment, every password to every log-in. His wife, Sarah, has gladly allowed her husband to take on the task of overseeing the finances. She trusts Tom completely to manage the family's money. They come to see the advisor, Tom does 90% of the talking, they sign the forms and all parties are satisfied.

Fast forward 10 years. Tom suddenly passes away. Sad, overwhelmed Sarah is now staring at a financial life she is nearly unaware of. She's never met with the advisor one-on-one. She doesn't really understand the plan. She's vulnerable to bad advice from well-meaning friends and, worse, to predators who target widows.

A good advisor sees this dynamic in the first meeting and addresses it head-on. They make sure both spouses are equally informed and comfortable. They insist on having conversations where the less-involved spouse takes the lead. They formulate a "what-if" paper that describes, in simple English, exactly what to do if one partner dies—whom to call, which accounts to access, and which decisions can wait and which cannot.

Even if you are not married, this matters. Who in your life knows about your financial situation? If something happened to you tomorrow, would your kids know how to find your accounts? Do they know who your advisor is? I've witnessed families spend months piecing together retirement accounts and investment holdings, following someone's passing because there was no organization or communication. That is a planning failure, and a good advisor will not allow that to happen.

When Markets Go Crazy: The True Test of an Advisory Relationship

March 2020. The pandemic hits. The market drops 34% in five weeks. Your portfolio has gone from an $800,000 value to $530,000. You are retired. You, as many do, take withdrawals. You are watching your savings (your life savings) evaporate. You can't sleep. You can't think about anything else. You're instinctively being told to sell everything and go to cash.

This point is the moment. This is the moment when you will determine what you actually have in an advisor.

The mediocre advisor sends a form email about "staying the course" and "looking long-term." The bad advisor does not connect with you until you ring them, and they are vague and unhelpful. The good advisor rings you before you have the opportunity to panic. They would go through every single reason why the plan is still viable. They remind you that you have two years of cash and bonds to draw on, so you won't be selling stocks at these lousy prices. They put the downturn into historical perspective. They calm you down.

This behavioral coaching—this ability to stop you from making awful emotional decisions— is how advisors earn their keep. Here is the harsh truth: the average investor is very poor at outperforming the market, not because they are bad investors, but simply they buy and sell at the wrong time. They chase returns by purchasing after it has gone up. And they panic and sell after it has gone down. An advisor who can stop you from doing this only once during your retirement will make you more than their fees worth it.

But this only works with a set of real trust established before the crisis happens. If you are having this serious conversation for the first time during a panic, it's too late. You need that established relationship during calm times. You need to have gone through smaller volatility moments together. You need to trust that when they say to hold on, they are not just reading from a common disaster playbook, but providing you advice based off of thorough knowledge of your specific life situation.

The Weird Shit Nobody Talks About

Retirement planning is not strictly about money. It is about the odd particular situations that come up when you are actually living in retirement, things that seem minor when it happens to perhaps, someone else, until it happens to you.

For example, social security "do-overs". Did you know that if you take Social Security and then come to the realization you did it wrong, you can pay back what you received and refile as if you never took it at all? However, you only have twelve months to do it, and most people don't even know they have that option. A good advisor who understands these quirks can save you thousands of dollars a year for the rest of your life.

Or the widow's penalty. When one spouse passes away, the surviving spouse loses one Social Security check but stays in the same tax bracket on less income, and their standard deduction is cut in half. Suddenly, they're paying more in taxes on less money. A good advisor starts making plans ahead of time to deal with this, perhaps through a Roth conversion in the early years of retirement when both spouses are alive, and the tax burden is spread out across the higher income.

Then we have the whole issue of "what to do with my time." This may sound like a life question - not a financial question - but they can be connected in ways that surprise people. I've witnessed recent retirees who got so bored, they started spending money irresponsibly just to have something to do. I've seen one fellow buy a boat, and he just parked it at the dock and then never used it. I've witnessed another lady flip houses and lose money on every single one of them, because she had no idea what she was doing, but needed a project.

The best advisors understand financial planning and life planning are inseparable. They will ask, "So what are you going to do with your Tuesdays?" They will help you consider structure and purpose before retirement. The issue with retiring into boredom and unstructured time is that many people either become depressed or spend too much, which can lead to trouble. This is not touchy-feely hype; it is purely about logistics, protecting your financial well-being.

The Technology Question and Generational Gaps

In general, nearly all advisory firms have integrated some technology, though the experiences can differ immensely. Some provide a fancy app that lets you view all your accounts at a glance, track spending, and run some what-if scenarios. Others still mail paper statements and rely on faxes.

And what you are comfortable with technology-wise does matter. If you are the type of person who checks your portfolio every day on your phone (don't do this—seriously, it will drive you nuts), you want an advisor who offers meaningful online tools. If you want to receive a quarterly paper statement and meet in person once a year, you want someone who is not going to steer you toward an online-only relationship.

However, this is where it gets complicated—age. Many retirees are in their sixties and seventies, and many financial advisors are in their thirties and forties. Sometimes, there is a disconnect. The younger advisor assumes everyone wants everything in email, or via text message. The older client wants a phone call or a face-to-face meeting. Neither is wrong but it creates friction.

Ask specifically about communication preferences, or generally, how they keep in touch with their clients? You can directly call them or you call through the receptionist? What is a reasonable email response time? Would you feel comfortable asking the advisor questions without worrying about burdening them?

While these questions may seem trivial in comparison to the advisor's investment philosophy and strategy, these breakdowns in communication have caused more advisory trust and client advisor relationships to sink than inferior investment performance has.

The Exit Strategy: When to Fire Your Advisor and How to Do It

It is not a topic of conversation, but sometimes you have to fire your advisor. Maybe they haven't returned a call or two. Maybe their investment strategy isn't working (and won't admit to it). Or, perhaps your advisor has changed, either because they have changed roles or because their firm was recently bought out.

You don't have to stay. Your money is your money, and you can transfer it. Having said that, many people remain in these advisory relationships, often because they don't know how to get out, or they endure transition because there is mental or emotional heaviness in leaving.

Let me help you: it's not that difficult...and the advisors not allowing the exit are the advisors to leave. The mechanics of it are simple--you open accounts with your new firm, fill out the paperwork to transfer the old accounts, and your new advisor will handle most (if not all) of the process. Under normal circumstances, the former advisor does not need to consent or be aware of the process. They absolutely cannot hold your money if you decide to transfer accounts. The process usually takes two to three weeks for the assets to transfer.

Yes, there is a personal aspect to this process and that can feel more uneasy than the mechanics themselves. Perhaps you have worked with this person for years. Perhaps they are a friend. Perhaps they have been referred by a family member, and now the thought of the emotional strain of moving to another firm.

Just remember, you need a retirement plan too. You cannot go back to earning this money. Loyalty is good; however, it can be harmful to your financial well-being, as long as you are being loyal to the right team. A good advisor may not like to hear what they are not doing for you or alternatives that may be better for you, but they should act in your best interest. If your advisor starts getting defensive or guilting you for even considering leaving, consider that a big red flag about whether or not to leave.

Before letting anyone go, make sure you are leaving for the right reasons. If you are upset that your portfolio was down in the last quarter, that is not a reason to leave - bear markets are natural. If you are upset because they won't let you chase after the latest hot stocks, they might just be saving you from yourself. If they are not communicating, they have made mistakes they will not acknowledge, and/ or you do not trust them anymore then go.

The Stuff That Keeps People Up at Night

Here is what real retirees worry about, because it is not always what the financial industry thinks it is. Of course, running out of God hates the wasteland was someone. You know what else people are often very worried about? Becoming a burden to their children.

This fear is so big that it forms rationale behind financial decisions that are not always rational decisions. Some people will underspend, living on less than they could safely do, out of fear that they may someday need financial help from their children. A good advisor helps you find that point between reasonable frugality, and denying yourself unnecessary deprivation.

Continuing healthcare costs that explode beyond anyone's wildest guess. Medicare is fantastic, but it doesn't cover everything. And a serious illness can bring enormous bills. And the uncertainty of if you'll be able to pay for the treatment you need is damaging. That is why planning for long-term care, and having adequate supplemental insurance is not optional—but essential for your peace of mind.

What about cognitive decline, and the risk of making poor decisions when you're not sharp anymore? Of all of these scary diseases, this is the scariest because it is insidious. You won't necessarily know you're declining. People in early dementia often become victims of scams or impulsive financial choices. A good advisor notices these things, and if he or she has established the right relationships, might then be able to communicate to adult children or some other trusted family member if there is ever a closely held suspicion about cognitive decline.

The best advisors are not hesitant to talk about these darker subjects; they actually bring them up, even when it is uncomfortable, in hopes of planning for the worst-case scenario, so that these things are not the cause of destroying your finances, but rather the event you planned for and the materials to help you endure in preparation for the event. This is how you build resilience into your retirement plan, so that if something goes awry—and something almost always does—you are prepared for it.

Final Thoughts

The relationship you develop with a retirement financial advisor is one of the most important you'll ever have. It is intimate in ways that likely feel strange at first. This person will know things about you that even your close friends do not know. They will know how large your net worth is, what you spend, what your hopes dreams are, and what your innermost fear is at 3 o'clock in the morning.

Finding the right fit takes time. It requires asking difficult questions, and being honest about each other's needs and expectations. It requires pushing past your hesitation to talk about money and facing the reality that we are human and that retirement has an intended timeframe.

But when you find someone who gets you as a person, who understands not just your balance sheet but your life—who sees you as a whole person with hopes and fears and complicated family dynamics—the value is incredible.

Because at the end of the day, a great financial advisor isn't solely managing your finances. They are giving you permission to enjoy your retirement without guilt, enjoy what you have earned, to enjoy saving for a trip or helping your grandchildren with college and donating to the charity or cause that matters to your heart. They give you confidence to actually live into your retirement rather than just merely surviving it.

And that could possibly be the greatest return on investment you ever receive.