Over time, retirement planning has grown into a distinct field within wealth management. As you consider retirement, it’s essential to work with someone who understands the complexities of asset decumulation, tax issues, and income strategies during retirement.

Unfortunately, even in today’s world, most financial advisors are generalists and are ill-equipped to lead retirees to optimal retirement outcomes.

Here, we explain the difference between working with a general financial advisor and a retirement planning specialist. 

We also examine the importance of fee structures—including why a flat rate financial advisor or a fixed fee financial advisor might be best for you.

Family Doctor or Cardiac Specialist?

Family doctors are great.  You see them once a year for a general checkup covering a wide range of general health topics.   They have all the basic equipment necessary to perform your checkup and run your tests.  If your family doctor hears something odd in your heartbeat, they refer you to a cardiac specialist. Why? Because that specialist possesses the exact training, experience, and equipment to diagnose the problem further and even perform heart surgery if needed.

Unfortunately, financial advisors don’t cooperate in such a fashion.  In fact, most financial advisors will try to convince you that they can handle whatever you need and that their service/solution is best.  Most financial advisors are generalists, trying to help clients with everything, including debt management, college savings, tax planning, estate planning, investment planning, and yes, even retirement planning. Why is that bad?   

Because of their lack of retirement planning expertise, many financial advisors with basic training and experience using generalist systems are not the best-suited individuals to advise clients through the far more complex challenges retirement presents.  Given the number of complex steps in a proper retirement planning process, the opportunity costs (or implicit costs) of working with the wrong advisor during this stage of life can be substantial.  

Retirement Specialists Have The Needed Tools and Experience

Retirement planning specialists (or simply retirement specialists for short) are financial advisors who have dedicated themselves to focusing only on retirement planning and the challenges of asset decumulation.  

This dedication and focus enable a retirement specialist to develop a deep understanding of the challenges and risks a retiree faces and how best to guide them through their retirement.

The best retirement planners ditch the popular generalist planning software used by most financial advisors (eMoney and Money Guide Pro) and  instead string together multiple coordinated specialized systems to extract the greatest amount of value for retirees along the following three dimensions:  

1. Tax-Efficient Withdrawal Coordination to Help You Save on Taxes

Strategically planning and coordinating your withdrawal strategy to minimize your lifetime taxes is key during the retirement planning process. Certain systems can evaluate dozens of different withdrawal strategies to come up with the top scenarios for you.  These scenarios consider all the different possibilities, including the use of Roth IRA conversion strategies and more.  A retirement specialist can then sort through the solutions to find the one that is right for you.  

2. Dynamic Withdrawal Rules to Improve Your Income Sustainability

Generalist financial planning software cannot model the impact of adding spending flexibility into a retirement plan.   Yet this tactic can add more value to your plan than all the tax planning work combined.  Applying a rules-based approach to portfolio withdrawals, a retirement planning specialist can actually increase your sustainable spending while also lowering your risk at the same time.

3. Optimized Asset Usage to Meet Your Specific Goals

Your investment portfolio is an asset, but it’s not your only asset, and some assets are better suited than others at tackling particular objectives within your retirement plan.  Asset types can be exchanged for one another to maximize your situation.  A specialist can help you determine the right mix and usage for your situation, given their knowledge of retirement risks and how best to manage them.  

Find a Retirement Specialist Near You Who Employs a Flat Fee Model

To help you get the best results, a retirement planning specialist should charge a conflict-of-interest-free flat fee for service instead of charging commissions or charging a percentage of your portfolio. A financial advisor who earns commissions will only consider those products he sells as solutions and will obviously be very biased. A proper retirement specialist  should not be biased based on the size of a portfolio, or a specific product/tool; they should only charge a flat fee for service to ensure they remain completely unbiased.  

When working as a flat-fee advisor, a retirement specialist will look beyond your investment portfolio and consider all your assets.  If insurance, an annuity, or a reverse mortgage is recommended, you can rest assured that it’s because it is the right tool for the job and not because a commission is being earned.  

A retirement specialist working on a flat-fee basis will also not be afraid to draw down your assets while respecting your risk profile and managing your risks, so you can maximize your spending and quality of life while living. All a retirement specialist should care about is making the most of your retirement situation for you.  

To learn more about why a flat-fee model is critical when it comes to receiving unbiased advice for your retirement planning, read our Thrive Retirement Specialists’ Insight Why a Flat-Fee Financial Advisor is Best for Retirees.  

If you would like to talk to a flat-fee retirement planning specialist, you can schedule a complimentary call here.