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- Understanding financial planning fees is crucial for effective budget management, especially as you approach retirement.
- Financial advisors employ various payment structures, which can significantly impact your investment growth over time.
- “For example, can you make the trades yourself? Can you manage the money yourself, if the advisor provides an initial investment allocation and rebalancing instructions?” – Sara Grillo, Marketing Consultant.
Explore how to optimize financial planning fees to enhance your retirement savings and overall financial health.
How To Save On Financial Planning Fees
As they near retirement, smart savers do not accept fees at face value. They seek ways to eliminate or reduce fees — by adopting DIY strategies or finding alternative providers with different business models.
Strategies for Reducing Advisor Costs
Pre-retirees need to pay extra attention to fees. Overpaying an advisor year after year for fee-heavy services or investment products can chip away at your retirement assets. Consider what you need an advisor to do — and not do — to help you. Financial planners offer a range of services depending on each client’s situation. It’s up to you to pick and choose what you want to pay for.
It Pays To Get Pro Advice Early On
Mid- or late-career professionals who’ve never hired an advisor may benefit from more intensive advice at first. They can obtain a customized financial plan that includes retirement planning, estate and tax planning, and an overview of insurance needs and investment issues.
Benefits of Initial Comprehensive Planning
“You may be better off paying a higher amount in the beginning of the relationship,” Grillo said. “After the initial ‘cleanup’ is done, you may only need minimal maintenance work” that you can do yourself.
Working With Virtual, Remote Retirement Advisors
The growth of virtual advisors creates another money-saving opportunity. These are financial planners who work with clients from long distances and rely on videoconferencing. Remote advisors, especially those who run a virtual-only practice, might charge lower fees because they save on the fixed costs that their office-based competitors incur.
Choosing Between Local and Remote Advisors
Whether you hire an advisor from afar or in your neighborhood, consider paying an hourly rate if you need help confronting a complicated or high-stakes financial decision. For example, new retirees may want to calculate the best time to take Social Security benefits or develop a plan for taking required minimum distributions from their retirement accounts.
Conclusion
Understanding and negotiating financial planning fees can significantly impact your long-term financial health. By choosing the right advisor and fee structure, you can ensure that you receive valuable advice without compromising your financial goals.
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