Question: “I currently have investments with a large investment company and plan to retire in six months. My employer works with a financial services company that offers a lot of financial planning assistance and they want me to transfer all of my funds to them. But, their cost is so much higher than what I’m currently paying. I’m torn about what to do. Both companies are well known. Besides cost, what else should I consider before making a decision?”

Answer: Cost is certainly an important factor in picking a financial firm, but it shouldn’t be the only one, especially as you approach retirement. Indeed, there’s a lot to consider when looking for a financial adviser, including what exactly they will do to help you plan for retirement, their credentials and whether they are a fiduciary. You can use this free tool to get matched with fiduciary advisers, from our ad partner SmartAsset, as well as sites like CFP Board and NAPFA.

“Financial planning becomes a much bigger priority during this phase of life. Make sure the guidance you’re getting is truly comprehensive, including areas like Social Security optimization, tax-efficient withdrawal strategies, portfolio risk alignment and more,” says certified financial planner Ryan Haiss at Flynn Zito Capital Management.

It’s also worth looking at your all-in cost, not just the advisory fee. “If the higher-cost firm provides ongoing, personalized financial planning and behavioral coaching to help you stay disciplined during volatile markets, that added value can be well worth it,” says Haiss. 

Additionally, you might consider speaking with other reputable CFPs to compare both fees and the scope of services. “That can help you better understand what you’re truly getting for the price and whether it aligns with your specific retirement needs,” says Haiss.

How to compare costs between firms

Comparing costs between firms means making sure you’re comparing apples to apples. “One firm might be a fee-only adviser, meaning they charge a transparent, flat fee or percentage of assets under management, with no hidden incentives. The other might earn commission from the products they recommend, costs that are often buried in fund expenses or transaction fees and not immediately obvious,” says Laura Mattia, certified financial planner at Wealth Enhancement. “At first glance, the fee-only adviser may seem more expensive, but once you account for hidden costs, potential conflicts of interest and product markups, the difference may not be as large or may even favor the more transparent option.”

Costs for fee-only advisers vary, but hourly charges tend to range between $200 and $500 per hour while project-based advisers cost anywhere from $1,500 to $7,500 on average, depending on the scope of work. Meanwhile, the average AUM fee is an industry standard of 1% AUM. Fee-based advisers, or those who earn commissions in addition to charging fees, are paid by a third party when they sell a specific financial product. This creates a conflict of interest because an adviser may be pushing something that isn’t in their clients’ best interest, but rather compensates them well.

What to look for in an adviser

While cost is certainly a factor, there are other important considerations when deciding whether to stay with your current investment firm or move to the one affiliated with your employer. “Find out if the adviser is a fiduciary, preferably 100% of the time. Fiduciaries are legally obligated to act in your best interest, while non-fiduciaries may only need to recommend suitable products which could carry conflicts of interest. If the adviser has a broker’s license, they have the ability to sell within the suitability standard and make recommendations that are not the best options for you,” says Mattia.

When conducting your due diligence, you’ll want to compare the breadth and depth of services offered by each firm, including things like comprehensive retirement planning, tax strategies and insurance advice. “Ask if they create a documented strategy. At minimum they will create an investment policy statement and a cash withdrawal strategy or income plan,” says Mattia. 

When evaluating advisers, it’s imperative to consider their experience, certifications and areas of specialization. “Two of the most respected designations in the industry are the CFP and the CFA (chartered financial analyst). A CFP is trained to create comprehensive financial plans that cover all aspects of your financial life, including retirement, taxes, insurance, estate planning and budgeting. It’s a broad, client-focused designation that ensures the adviser is equipped to help you align your financial decisions with your life goals,” says Mattia.

Conversely, CFAs dive deep into the science of investing. “CFAs are experts in building efficient portfolios that aim to minimize risk for a given level of return. This designation emphasizes portfolio construction, risk management and financial analysis,” says Mattia. 

Try to suss out whether you’ll have a dedicated adviser or a rotating team and make sure the firm you go with aligns with your risk tolerance, time horizon and investment preferences. “Are they primarily active or passive managers? How do they make their investment decisions? Do they rely on proprietary products or do they offer an open-architecture platform that gives you access to a broader range of investments?” says Mattia.

One question certified financial planner Jim Hemphill at TGS Financial Advisors says you’ll want to have your adviser answer is how they can successfully help you navigate the transition from working full time to being retired full time. “That’s a challenging process with profound financial and emotional implications. You want to choose the long-term partner who has the right skills to help you approach the next phase of your life with a complete financial plan that gives you rational confidence in your future,” says Hemphill. You can use this free tool to get matched with fiduciary advisers, from our ad partner SmartAsset, as well as sites like CFP Board and NAPFA.

Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.

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