1. Does the advisor have a CFP Designation? Those with a designation of CFP (Certified Financial Planner) are required to follow a code of ethics. They are subject to regulation by various federal, industry, and state agencies. Your best choice is to limit your risk and work with somebody with an obligation to abide by a code of ethics—a Certified Financial Planner.

2. Who Holds Your Money? It seems like a simple thing, but it’s easy to overlook. You want to have your money held by a custodian, like Pershing, LLC or Fidelity Institutional Wealth Services. If you were to have an advisor named, for example, Bernie Madoff, you don’t want to see “Bernie’s Excellent Investment Firm” stamped on your statements. Be aware of just who has your money.

3. Can the advisor provide a copy of his/her ADV Part 2B? This disclosure form holds a few key indicators. It will help you distinguish whether the advisor is fee-based or not. This report also discloses if there has been certain disciplinary history. Be sure to utilize other resources, such as SEC (www.sec.gov/investor/brokers.htm) and FINRA (www.finra.org/Investors/ToolsCalculators/BrokerCheck/), to run checks for complaints against the advisor whom you are considering as well.

4. Is the advisor an employee of a financial firm or working independently? Some advisors who work for a firm offer proprietary products, and they may have to sell certain products and meet minimums. Their primary objective may be to make money and limit their own risks. Look instead for independent advisors. That doesn’t mean they don’t have relationships with certain firms, but they are paid as independent contractors.

5. Does the individual have a specific process or approach to advising? If the advisor can’t produce a process, or if it’s all investment related and focused on money, be wary. What you want to see is a process that is centered on you, with the money there to support you.

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Ideally, you need to know if you have enough assets and investments to retire happily and safely. Here are the first three steps you and your financial advisor should take:

Step 1: Estimate how long retirement income will be needed. How many years must the assets last? Are you and your spouse healthy? Is there a history of longevity in your family?

Step 2. Identify and manage the numerous risks, such as inflation, longevity and healthcare expenses, just to name a few. then try to reduce the risks, as much as possible,

Step 3. Start to convert resources into income, regularly updating the plan. Converting assets for lifetime income is the fundamental strategy in the retirement income planning process.

To get a ballpark figure, you can use this standard approach to calculating income needs: (1) figure average monthly expenses, (2) add up any lifetime income such Social Security and pension, and (3) subtract the monthly income from the expenses to determine any gap. To see if the gap can be filled, add up all financial assets and multiply by an expected annual rate of return, then divide the result by 12 for a monthly income stream. If it fills the gap, you can retire.

If it doesn’t fill the gap, look at some other approaches. You have various options: Increase your returns where possible; find other lifetime income sources; spend less in retirement; work full or part time; postpone the start of Social Security or pension payments; increase your savings; or tap into your home equity.

Of course, your financial advisor is there to help you determine the best course of action for maintaining your income stream or uncovering ways to increase that income stream for the right retirement plan for you.

The post 3 Steps to Start Living the Retirement of Your Dreams appeared first on Distribution Land.