6 Mistakes Railroaders Make When Choosing a Financial Advisors

Transcript:

Don't make these mistakes when you're seeking railroad retirement help.

Welcome everyone to another edition of the Highball Advisors, Railroad Retirement whiteboard. My name's John McNamara of Highball Advisors. And today we're going to talk about those railroaders that want to go out and seek some financial help, some assistance with retirement, a lot of confusing things going on. Studies show, you get help with advisors, the right advisors obviously, it improves your chances for a successful retirement.

So, for those individuals who don't want to go out on their own, want to look for an advisor, well, I've put up these six mistakes that you want to avoid as you go out and seek advice. So we'll just work our way through them here. First one up, hiring an advisor who is not a fiduciary. So there's a bifurcation in the financial advising industry. You have fiduciaries, who act in the best interest of their clients, and then you have a broker/dealer or those who use suitability. So they'll put you in an investment just because you can afford it, that type of thing. So suitability type thing.

So, fiduciaries, they're working with you, for those planning retirement it's just a better standard that you want to look for. And that's not to knock the other suitability or broker/dealer type peoples, but they're getting paid differently. They're getting paid on commission or they're getting paid by a mutual fund company. Fiduciaries are just acting in your best interests and are getting paid by them. So that's number, look for that fiduciary. "How are you acting? Are you acting as a fiduciary?" "Yes." "Okay." So that's something you want to think about.

Hiring the first advisor you meet. I'm a big preacher on this. Even if I'm doing a project around the house, I like to get two, three quotes. Especially with an advisor, it's a long-term relationship, so you want date a couple, and you check it out. So, meet a few advisors, see which ones you work with, you have a good personality chemistry, they're right for you, they're adding value to your retirement, those type of things. So that's important. So meet a couple, that's always a good one.

Number three, choosing an advisor who understands the railroad retirement benefits. Well, that's kind of straightforward, right? You wouldn't want to go, if you had a problem with your foot, you broke your leg, you wouldn't want to go see a cardiologist. So, that's kind of self explanatory. Go meet somebody who understands your railroad retirement benefits, especially when it's such a big part of your retirement. So that's important for sure.

Picking an advisor with an incompatible strategy. There's some advisors, maybe they're pushing something else, maybe they're pushing annuities at you or something, or maybe they're pushing, "Hey, let's do some tech stocks, let's do this." You want to be comfortable with how they're approaching it. What's their strategy for investing? Why are they talking to you about estate planning? Are they just talking about investments or are they talking about everything? Tax planning, estate planning, railroad retirement benefits. So how are they communicating with you, and what are they trying to get you into? So that almost goes back to being comfortable with somebody too.

Number five, not asking about credentials, that's important. Licensing, maybe look into somebody's background, any records, financial advising industry, they always will make the headlines now and again, that's for sure with some of the individuals. So make sure, check that person out, make sure that they're above board. That's important stuff, that licensing and all that. There's an organization FINRA, you can go on there and take a look at that. BrokerCheck, you just Google the word BrokerCheck and you can look up advisors.

And then finally like, last one, not understanding how they are paid. So, that goes almost back to the first point. You have broker/dealer types advisors and they'll get paid by commissions. Maybe they get incentivized trips, all those type of things. How are they getting compensated? And some get paid, for myself, I get paid under assets under management, how much percentage of what I manage. Some people do it other ways. Some people say, "Hey, percentage of your net worth," or maybe some flat fees. Or, like I said, maybe getting commissions back on annuities or mutual funds, 12b funds. So there's a lot of different ways people are getting paid. So understand that, that's very, very important also.

I hope you found this helpful. These are the six tips, high level stuff you want to check when you want to go looking for a financial advisor. I think these are a very good basis to start a good conversation with an advisor. Please feel free to share this with other railroaders, it's great. Subscribe to the YouTube channel, closing in on 2000 subscribers, so I'm hoping to get there soon. All right. Until next time, everyone, please stay safe, stay on track and take care. So long everybody. Bye.

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