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How to Get Reliable Retirement Planning Advice

Emily Brandon

The Trump administration is seeking to delay and perhaps dismantle the fiduciary rule. Originally scheduled to take effect in April, this rule would have legally required financial advisors handling 401(k) plans and individual retirement accounts to make recommendations in the best interest of their clients, and not the most profitable investments for the advisor. Whether the rule will be implemented is now unclear. Nonetheless, some financial advisors are already upholding the fiduciary standard. Here's how to find retirement planning advice you can trust:

[Read: 5 New 401(k) and IRA Rules for 2017.]

Find a fiduciary. Ask potential financial advisors if they are willing to act as a fiduciary, which means they agree to recommend investments that are in your best interest. "The best protection is for the investor to take matters in their own hand and have whoever they are considering sign the fiduciary oath," says Harold Evensky, a certified financial planner and professor at Texas Tech University. "It's a simple mom-and-pop statement that clearly explains the commitment of the advisor."

Ask how your advisor is paid. Find out how your financial advisor makes money. Some financial advisors charge a percentage of your portfolio, while others are paid an hourly fee for the time they spend working for you. "The public should insist on a fee-only planner and be told what their costs and fees are in advance to get a comprehensive cash flow, year-by-year analysis of retirement income, taxes and expenses," says Jennifer Failla, a certified financial planner for Strada Wealth Management in Austin, Texas. An advisor who charges a flat fee or hourly rate has less incentive to recommend expensive investments because his or her bottom line won't change based on your fund selections.

[Read: Workers Who Are Excluded From 401(k) Plans.]

Find out if specific investments make a bigger profit for the advisor. Look into whether the advisor's compensation changes based on which investments you select. "Many large firms can call themselves fiduciaries, but recommend their own funds for their portfolios. It is a conflict of interest, it is wrong and it is not in the client's best interest," says Mark Struthers, a certified financial planner and founder of Sona Financial in Chanhassen, Minnesota. "[You] should be asking a planner: Would there be any conflict of interest with your recommendations? Do you or your firm benefit by choosing one path over another?" Some advisers will recommend investments that result in a bigger profit for the advisor, but aren't necessarily the ideal investment for the client. For example, a broker could steer you toward a given investment in order to qualify for a bigger commission.

Compare fees before moving your money. Before rolling over your money to a new firm, compare the fees on your existing investments to the fees in the new account. "Are [the advisors] paid based on how much money of their client's they manage?" asks Garrett Prom, a certified financial planner and founder of Prominent Financial Planning in Austin, Texas. "Thus, they may be much more likely to encourage a client to invest more money or move prior 401(k)s under their management, even if it may make more sense to pay down debt or leave the accounts where they are." While consolidating accounts can simplify your financial life and sometimes save you money, leaving your money in a low-cost 401(k) plan is sometimes a better deal.

[See: How to Reduce Your Tax Bill by Saving for Retirement.]

Look for experience and credentials. Don't trust financial advisor recommendations you receive from friends and colleagues without vetting them first. "Client references are not useful as the clients of every con artist are happy until the bottom falls out," Evensky says. Not all people who call themselves wealth managers, financial consultants or other impressive titles have a legal responsibility to select the best possible investments for the client. "Look for a seasoned advisor who has been in the business through a market cycle or two, is a fee-only fiduciary and a certified financial planner who works primarily with clients like you," says Michele Clark, a certified financial planner for Clark Hourly Financial Planning and Investment Management in Chesterfield, Missouri. She recommends looking for a financial adviser through an established professional organization such as the National Association of Personal Financial Advisors, Alliance of Comprehensive Planners, Garrett Planning Network or XY Planning Network.

Emily Brandon is the author of "Pensionless: The 10-Step Solution for a Stress-Free Retirement."

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