What Is a Retirement Financial Advisor?

A qualified financial advisor for retirement planning can provide invaluable guidance and support as your plan for your golden years. With the increasing complexity of the financial landscape and the growing number of Americans approaching retirement age, the role of retirement advisors has become more important than ever. These advisors often offer a wide range of services, from optimizing Social Security benefits and creating sustainable income streams to managing investments and protecting against financial risks.

If you need help finding a financial advisor for retirement planning, SmartAsset’s free tool can connect you with fiduciary advisors who serve your area.

What Does a Retirement Advisor Do?

A retirement advisor is a specialized type of financial professional who focuses specifically on helping clients plan and save for their golden years. The Census Bureau estimates the number of Americans ages 65 and older will nearly double from 49 million in 2016 to 95 million by 2060. With an aging population, the demand for retirement planning services is growing rapidly, making the role of retirement advisors increasingly important in ensuring individuals and families are well-prepared for a financially secure future.

Retirement advisors provide a wide range of comprehensive services to help clients prepare for retirement. These services include:

Retirement income planning: Creating a sustainable income stream in retirement.
Investment management: Creating a diversified portfolio aligned with the client’s goals and risk tolerance.
Social Security planning: Optimizing claiming strategies to maximize benefits.
Long-term care planning: Addressing the potential need for assisted living or nursing home care.
Estate planning: Ensuring assets are distributed according to the client’s wishes.
Risk management: Protecting against financial risks such as premature death or disability.

One of the key advantages of working with a retirement advisor is their ability to develop personalized retirement strategies based on each client’s unique financial situation, goals and risk tolerance. For example, a 35-year-old client with a high income and aggressive investment style would require a different approach than a 60-year-old client with a conservative risk tolerance who is nearing retirement.

Retirement advisors take into account factors such as age, income, assets, retirement timeline and desired lifestyle in retirement when crafting these customized plans.

Types of Retirement Advisors

To demonstrate their expertise and commitment to the field, many retirement advisors pursue specialized certifications. These certifications require advisors to complete rigorous training programs and pass comprehensive exams, ensuring that they have the knowledge and skills necessary to provide high-quality retirement planning services.

Some of the most common retirement advisor certifications include the retirement income certified professional (RICP), the certified retirement counselor (CRC) and the chartered retirement planning counselor (CRPC).

Meanwhile, some advisors pursue the Certified Financial Planner™ (CFP®), which is considered by many to be the gold standard of financial planning certifications. Retirement planning is among the many topics CFP® professionals must develop expertise in.

How Much Does It Cost to Hire a Retirement Advisor?

A retired couple meets with their retirement planner in her office.

When it comes to hiring a retirement advisor, you should consider their fee structures and the costs associated with services. Financial advisors may employ different fee models, such as asset-based fees, hourly rates or flat fees, each with its own advantages and disadvantages.

Asset-Based Fees

Asset-based fees typically range from 1.18% to 0.59% of the total assets under management (AUM), with the percentage decreasing as the portfolio value increases. The average AUM fee for a $1 million portfolio is 1.02%, according to AdvisoryHQ. This fee structure aligns the advisor’s interests with the client’s, as the advisor’s compensation can grow along with the portfolio. However, it may not be the most cost-effective option for clients with smaller portfolios or those who require limited services.

Hourly Fees

Hourly rates for financial advisors can vary from $200 to $350 per hour, although the median rate is $250 per hour, according to a 2023 study produced by Kitces.com. This fee structure may be more suitable for clients who need specific advice or have planning needs but don’t require ongoing asset management.

Flat Fees

Flat fees are often charged for standalone services, such as creating a financial plan, and typically range from $1,225 to $5,000, according to the Kitces study. This option provides clarity on the total cost upfront and may be more appropriate for clients who have a well-defined scope of work. Some advisors, meanwhile, may charge an annual retainer fee.

How to Evaluate an Advisor’s Fees

When selecting a retirement advisor, it is essential to understand and compare their fees, as these costs can significantly impact the growth of your retirement savings over time. It’s important to ask potential advisors the right questions about their fees and services. Some key questions to consider include:

What is your fee structure, and how are fees calculated?
Are there any additional costs, such as transaction fees or expense ratios for recommended investments?
What services are included in your fees, and are there any services that require additional charges?
How often are fees assessed, and how will they be deducted from my account?
Can you provide a clear breakdown of all fees and costs associated with your services?

Pros and Cons of Getting a Retirement Planner

A financial advisor who specializes in retirement planning speaks with a pair of prospective clients.

Working with a financial advisor who specializes in retirement planning can provide numerous benefits, such as expert guidance in creating a comprehensive retirement plan, assistance in optimizing investment strategies and support in navigating complex financial decisions. However, it’s important to consider the potential drawbacks, including the cost of advisory fees and the possibility of conflicts of interest if the advisor is not acting as a fiduciary.

Here are four common benefits of working with a retirement planner:

Personalized retirement strategies tailored to individual goals.
Professional management of investments to optimize returns.
Comprehensive planning, including estate and long-term care considerations.
Expertise in navigating complex retirement regulations and benefits.

However, remember to weigh these benefits against potential drawbacks:

Advisory fees can be significant, impacting overall savings.
Potential conflicts of interest if the advisor is not a fiduciary.
Risk of dependency on advisor’s guidance for all financial decisions.
Variation in advisor quality and expertise can affect outcomes.

How to Find a Financial Advisor for Retirement Planning

Finding the right financial advisor for retirement planning is an important step in ensuring a secure financial future. To begin the process, it’s important to understand your specific retirement goals, research potential advisors’ credentials and experience, and review their fee structures to ensure they align with your needs and budget.

Define your retirement goals: Before searching for a retirement advisor, make sure you have a clear understanding of your retirement goals. These goals will serve as a guide in finding an advisor who specializes in the areas most relevant to your needs.
Research credentials and experience: When considering potential retirement advisors, thoroughly research their credentials and experience to ensure they have the necessary expertise and knowledge to manage your retirement planning effectively.
Review the fees they charge: Review an advisor’s fee structure and rates, and make sure they are transparent and align with your budget.
Confirm they’re a fiduciary: Fiduciary advisors are legally obligated to act in your best interests, prioritizing your needs over their own. Failing to work with a fiduciary advisor could result in recommendations that may not be in your best interest, potentially jeopardizing your retirement savings and goals.
Conduct interviews and ask questions: Before hiring a retirement advisor, schedule interviews with potential candidates to assess their communication style and approach to retirement planning.
Check reviews and references: To gain insight into an advisor’s reputation and client satisfaction, check online reviews and testimonials from previous clients. Additionally, ask the advisor for references and contact them to learn about their experiences working with the advisor. You should also look into the advisor’s legal and regulatory history on the SEC’s Investment Adviser Public Disclosure (IAPD) database.
Assess the fit: After conducting thorough research and interviews, assess the overall fit between you and the potential retirement advisor. Consider factors such as their communication style, availability, and the rapport you’ve established to ensure a successful long-term working relationship.

Bottom Line

Retirement advisors play a vital role in helping individuals and families navigate the complex landscape of retirement planning. By providing comprehensive services such as Social Security planning, retirement income planning, long-term care planning, estate planning, investment management and risk management planning, these specialized financial professionals help clients develop personalized strategies to achieve their retirement goals.

Tips for Finding a Financial Advisor

If you’re serious about hiring a financial advisor to help you plan for retirement, manage your assets or provide some other service, be sure to read our comprehensive guide for how to find and choose a financial advisor.
Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.