Retirees are turning to financial advisers, many for the first time, after navigating their saving years on their own.
About a quarter of retirees who have never worked with a financial adviser are now on board, double the number from five years ago.
“Retirees increasingly have lump sum savings from retirement plans that they need help with investing and spending and figuring out how to withdraw from their savings to generate income,” said Craig Copeland, director of wealth benefits research at Employee Benefit Research Institute (EBRI), which published the findings.
Most of them accumulated a stockpile on their own through consistent investing over the years in their employer retirement plans, IRAs, and brokerage accounts. But now it’s showtime.
“New retirees want to know if they are on track,” said Nathan Sebesta, a financial planner in Artesia, N.M.
Their biggest questions: how to turn savings into retirement income, what to do with old retirement accounts, when to claim Social Security, how to reduce taxes, and whether their estate plan is up to date.
“Retirement is often the first time in decades anyone has looked at the whole picture at once, and the gaps show,” Jordan Whitledge, a financial planner in Evansville, Ind., said. “Most people do not hire a guide until the terrain changes, and retirement is when it changes.”
‘Psychological shift’
Once someone decides to retire, “there is a significant psychological shift,” said Andrea Billquist, a financial planner in College Park, Texas. “Many quickly realize that they have more questions than answers and identify that they would like advice and support to make the right steps.”
Not every retiree wants ongoing wealth management. Many simply want an independent second opinion to review retirement and tax planning, said Joon Um, a financial planner in Beverly Hills.
“Often the starting discussion point is literally how to turn their 401(k) into a monthly paycheck by setting up automatic bank deposits and tax withholdings,” said Tyson Sprick, a financial planner in Overland Park, Kan.
“As basic as that sounds, people don’t want to mess up anything with their largest asset and feel better having someone guide them through this process.”
What it costs
A one-time review typically costs between $1,500 and $5,000, depending on the scope, and then retirees implement the recommendations.
“With all the information and tools available online, many retirees can manage retirement on their own but want to make sure they aren’t making any mistakes,” said Derrick Schuler, a financial planner in Columbus, Ohio. “In many cases, retirees come back every year or every few years to update their plan.”
Some planners offer an initial free consultation. “I don’t charge for someone to meet with me and develop a financial plan,” Byrke Sestok, a financial adviser in Harrison, N.Y., said.
“My approach is that if you want to onboard as a client after we develop a financial plan, then you get my full suite of annual services. If you choose to do it yourself, you now have a list of important steps to complete, and it’s up to you to complete them.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X. You can reach her at kerry.hannon@yahooinc.com
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