Intimidated by Retirement Investing? Get Professional Help!

By Sarah Winfrey on 11 April 2007 (Updated 10 June 2007) 2 comments

911 emergency

It might seem like something of a no-brainer to ask for professional investment advice, particularly about retirement. That said, there's still an astonishing number of people I know who don't. They either go it alone, wading through jargon that they don't understand and desperately trying to make numbers that don't mean anything to them mean something, or the guess and hope they get lucky, or they avoid the topic altogether.

I'm lucky. I work for a company that offers a very generous matching program for funds invested in a retirement account. It's a non-profit organization, so I have a 403(b) instead of a 401(k). There are some salient differences there and I'm not sure which I would choose if I could choose anything, but the 403(b) is my only option so I knew I was going with that. It seemed like it would be easy to figure out, given the amount of colorful brocheures full of smiling people that I was handed on my day of hire.

And the fact that I successfully avoided those brocheures for almost a year? Well, let's chalk that up to planning a wedding and the fact that the generous matching program doesn't start until I've worked here for a year, and not to fear or...yeah. Please?

Recently, though, the day came when I actually looked at the packets of information. Lo and behold, I felt intimidated. This in spite of the fact that I'm knowledgeable about personal finance, I have other investments, and I'm comfortable with the basics (diversify (but not too much!), look into growth when you're young, etc.). A big part of the intimidation came from the fact that the choices I make in this situation determine so much of my future. I felt so intimidated that I avoided it for a week. Then I called my dad. Then I actually read all of the material. Finally, I gave up. I realized that I couldn't do it myself, got the name of our rep from HR, and called him. Once again, I'm lucky. He was coming out today and still had appointments available.

I met with him this morning and it was wonderful. He was professional and friendly, and comfortable with eye contact (a must for me!). He was able to explain the funds and even recommend some. He gave me an outside source that I could check for other reviews and to corroborate his claims. He even brought a calculator so we could determine how much, exactly, I want to put into the account every paycheck. I feel so relieved. My money is in good hands, and he will be keeping track of the funds to make sure they continue to perform well.

I've heard the horror stories about shoddy or bad financial advisors. You've heard the stories. We've all heard the stories. So, in light of my experience today, here are some things to think about when you're choosing someone to meet with.

  • Make sure your financial advisor comes recommended. The man I met with today represents a major company. He graduated from the university I work at and also advises some close friends of mine. Their accounts have made money, and they like this man.
  • Get external support for what he says. A good financial advisor will tell you where you can see the funds he recommends tracked. If the source he gives you is his own company, ask for another one. You can find it yourself, but he should be willing to direct you there without a problem.
  • Ask questions that are important to you. Today, I confirmed with him that I can reallocate assets later, if fund performance changes or my investing goals change. I also found out that my 403(b) is easy to rollover to another company, to a 401(k) if I ever get a job in the public sector, and even to and IRA and a Roth IRA. Since I don't plan to work this job forever, that was important to me.
  • Get a feel for how truly prepared your advisor is for your meeting. Professionalism can cover a multitude of sins, but not ineptitude, ignorance, or dishonesty, especially in the world of finanicial advising. Look beyond what he wears and how he talks to you to other details. Is he familiar with any forms you fill out (mine was--he saw immediately that the ones HR had given me last year were out of date)? Does he know your company well? Does he have the tools he needs to do his job well (like a calculator, and an extra pen)?
  • Make sure he listens to you. An advisor can know all there is in the world to know about investing and still not be the person you want to deal with. Does he make time during his spiel to answer your questions? Is he willing to be interrupted when you have a question? Does he respond to how much you know about investing, or does he just go through his pitch? All of these are important when you're trying to find someone you may be working with for quite a while!

Happy investing!

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Will Chen's picture

That's a great tip Sarah.

I think a lot of young people feel a bit intimidated by this process.  Sometimes they end up not asking the right questions because they don't want to look stupid. 

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Rhea

A lot of old people are intimidated, too.