Getting a Second Opinion on Your Pending Retirement

1. Your financial advisor downplays your concerns. One of the most frequent concerns that we hear when we meet a potential new client is that their financial advisor simply ignores their concerns.  In a study of financial advisors and their clients conducted by Russ Alan Prince and David Geracioti, the researchers found that advisors have a history of being significantly disconnected from their clients’ actual needs.  When asked what their top concern was, more than 88 percent of clients answered “losing our wealth.”  In stark contrast, when their advisors were asked the same question, only 15.4 percent said “losing their wealth” was the top concern of their clients.  If your advisor isn’t listening to you, or he or she is providing advice more to their benefit than yours, you may want to consider a second opinion.

2. Your life situation has changed. A loss of a spouse, a divorce in the family, an infirm parent moving in with you, or a major medical issue are all life-altering situations that require a re-evaluation of your finances.  In situations of great change, you may want to solicit different ideas for addressing your financial situation from an advisor with a different skill set.

3. You are preparing for a major expense. A child’s wedding, the purchase of a second home, or a desire for extensive travel—these are all joyous events that also require planning.  To make sure these dreams are feasible, and that their impact on your investment accounts is survivable, it may be wise to get a second financial opinion.

4. You are within 3 years of retirement.  The path that you took to get to retirement is not the same one you should take to get you through  Not only do your needs change, but your risk tolerance also changes.  This is particularly important if your current advisor is recommending that you stay heavily invested in a volatile stock market.  That advice may work for a younger investor who has more working years ahead and the time to weather another financial storm.  You owe it to yourself to make sure you’re on an age-appropriate path for financial freedom.

5. You believe your portfolio contains too much risk.  The average bear market decline of the last 100 years is -34%.  Losses incurred in 2000-2 (-51%) and 2007-9 (-57%) have only recently recovered their value, and many who have just retired or are about to retire, can’t afford another such loss on their accounts.  As the age-old standard for determining risk at a particular age shows (see chart below/at right), a 60 year-old approaching retirement shouldn’t have more than 40% of his/her assets at risk in the stock market—precisely because he/she doesn’t have the time to recover a substantial loss in the 5 years remaining before they retire.  Surely this is a daunting dilemma.  Q: What if you could protect your entire principal, still have the opportunity to earn reasonable returns, and eliminate all market downside?  A specialist in such solutions has the expertise to help you reposition your assets for a risk-free financial future.

6. You are planning a legacy for your heirs. Many retirees want to enjoy their retirement, but also want to leave a legacy for their children and grandchildren and that provides resources now and in the future.  Legacy planning requires mitigating tax consequences and avoiding numerous financial traps.  Without the guidance of a specialist, your good intentions could do as much harm as good, and even cause an undue burden on your beneficiaries.

Your financial advisor works for you, not the other way around.  It’s up to you to advocate for yourself and take the necessary steps to make sure your best interests are protected.  Getting a second opinion can confirm a good plan or protect you from a bad one.  After working so hard to save for this next stage of life, you owe it to yourself to make sure you achieve the retirement you deserve.