Selecting a high quality retirement planner, who can produce a realistic retirement plan, is one of the most important financial decisions you will ever make. On the other hand, if you select a retirement planner who is really a salesman your dream of a comfortable, secure retirement could go up in smoke.
Can Anyone Claim to be a Planner?
Unfortunately, anyone can claim to be a retirement planner. There is no license or test that will help you identify real retirement planners. In my opinion, this is a major breach of trust by the financial service industry for the treatment of investors. The industry has made it your sole responsibility to determine who is a real retirement planner and who is using the title to help them sell investment and insurance products.
What About a Code of Ethics?
Companies and financial planner associations publish Codes of Ethics that planners are supposed to adhere when they produce retirement plans for their clients. However, it has been my experience that these Codes are more of a marketing tool than an actual standard for the treatment of clients. In fact, I would be very cautious of planners who make too big a deal of the Code. That’s because the organizations that produce the Codes have no way to enforce their provisions until there is a client complaint and by then it is always too late.
What About Licensing & Registration?
There are no licenses or registrations for retirement planners. They may hold securities licenses that permit them to sell financial products for commissions. Or, they hold Investment Advisor Representative registrations that permit them to provide ongoing financial advice and services for fees. Your best bet is to select the IAR because you need ongoing advice, not one time sales recommendations.
Read Between the Lines
Before you select a retirement planner you should always ask to see a plan with the name removed that they produced for a client similar to you. Planners won’t like this because you may use the plan for yourself and not pay them for it. But, forget their self-serving concerns. This is a very reasonable request because their plan will determine when you retire, your standard of living during retirement, and your financial security late in life. When you review the plan read between the lines to see if you can identify recommendations that impact how much money the retirement planner makes if you adopt the plan.
The “Free” Retirement Plan
A lot of salesmen market free retirement plans that help them sell investment and insurance products. For example, you receive a free plan from a sales rep that recommends the purchase of life insurance, long-term care insurance, and annuities. The commission from the sale of these products totals $25,000. You end-up paying inflated expenses to insurance companies that offset the commissions that were paid to the sales rep. There are no free lunches in the financial services industry.