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The Journey: How to find a financial adviser you can trust

McClatchy-Tribune Information Services

March 16, 2015


Q: It was with great interest that I read your recent article on free retirement-planning dinners. Iím a retired Miami-Dade policeman, and have turned down three dinner invitations from financial planning services recently because I was suspicious they were just sales pitches. I have a stable pension that should cover expenses but am seeking advice on how to manage my deferred compensation account, an old IRA and an annuity to provide for my spouse, children and grandson. Iím about to turn 65 and wondering where to begin to select a financial adviser who is unbiased and honest.

A: That column discussed checking out the disciplinary records of advisers who are hosting upcoming financial seminars (finra.org or sec.gov) but if youíre starting from scratch and looking for candidates who focus more on financial planning as opposed to strictly investment management, here are three ideas:

Know what you want. Youíll save yourself a lot of time and angst by having a solid understanding of what type of advice you are seeking and being able to articulate your questions as you interview candidates. Based on your letter, your key issues might be providing retirement income for your spouse after you pass away and then leaving some kind of legacy for future generations. Does that mean you chose a higher pension benefit amount that will terminate when you die? If so, do you have a life insurance policy designed to replace that income for your spouse, or are you looking for advice on how to structure your investments to make up the difference? How does the annuity fit into the plan, and do your potential adviser candidates sell insurance and annuities in addition to providing financial planning advice? If so, how will they remain objective and act as a fiduciary, putting your interests first? Does it make sense to roll your deferred compensation plan into a low-fee IRA or does your plan offer solid investment choices at even lower fees? Whatís the best tax strategy as you begin collecting Social Security and making withdrawals from the tax-deferred account?

Cultivate smart referrals. If you have an ongoing relationship with an accountant or an attorney you respect, ask him or her for a referral to an adviser experienced in retirement income planning and estate planning. Referrals from friends or former colleagues can be fruitful, but donít ever sign on with an adviser assuming the last person did the due diligence (background checks, etc.) for you.

Rule of three. You can also find advisers through directories kept by the Financial Planning Association (plannersearch.org), National Association of Personal Financial Advisors (napfa.org), Garrett Planning Network (garrettplanningnetwork.com) and the American Institute of CPAs (aicpa.org), which keeps a directory of accountants with additional financial planning expertise. Once you compile a short list, commit to interviewing at least three different candidates from unrelated firms, asking how they would handle the questions raised in step one and how they work with retirees in your situation. Tossing the same questions at all of the candidates and evaluating the differences in their responses helps identify the best fit. For more ideas, check out "Getting Started in Finding a Financial Advisor" by Chuck Jaffe.

Q: Iím over 65, still working, and have been collecting Social Security benefits for more than a year. When I changed jobs in January, I learned that my new employer will contribute $2,000 per quarter, beginning in April, to a health savings account on my behalf. What are my options?

A: Generally, you canít be on the Medicare rolls and also contribute to a health savings account because those accounts were designed to be paired with high-deductible health insurance plans. Check with your benefits department to see if thereís a way your employer could compensate.