MW Our financial adviser's fees don't justify the results. Is there another way to retire early?

By Alessandra Malito

'I'm looking for more cost-effective ways to plan for retirement'

Dear Help Me Retire,

I'm seeking advice on optimizing my retirement planning and investment strategy. My wife and I are approaching retirement age (58 and 57, respectively) with approximately $700,000 in IRAs and 401(k)s. Our combined annual income is around $248,000, with me contributing about $40,000 annually to Roth 401(k) and IRA accounts.

Currently, I'm using a financial firm to manage my accounts, but I'm questioning whether the fees justify the results. I also have a personal trading account where I occasionally buy stocks, though my timing hasn't been ideal.

I'm looking for more cost-effective ways to:

-- Plan for retirement

-- Ensure proper investment allocation

-- Maximize returns while minimizing fees

-- Potentially retire earlier than initially planned

Are there any recommended strategies or services that could help me achieve these goals without the high costs associated with traditional financial management firms?

Weighing the Options

Related: I'm 45 and my 401(k) was frozen. Should I roll it over to a bigger account, a Roth IRA or just withdraw all $140K?

Dear Weighing the Options,

You've listed out what you want, but the question you really need to ask yourself is: how do you really want to accomplish all of that? Are you willing to do it all yourself, or would you like someone to help you, but perhaps in a different way? Also, ask yourself what you're willing to pay for it either way.

You have a few really good goals, but they take quite a bit of calculating and some expertise. There is plenty you can do on your own - there are DIY investors all over the place - but you have to be ready to put in the time to understand the nuances of retirement planning and investing, and you also have to make sure you don't jeopardize your retirement assets as a result.

For example, ensuring proper investment allocation comes down to a balanced portfolio that grows over time to beat inflation but isn't so aggressive that a sudden downturn loses you thousands of dollars (especially given your proximity to retirement age). At the same time, maximizing returns while minimizing fees can be very subjective. You want to get the most cost-effective investments, in the sense that they themselves aren't expensive, but maybe a fee could be justified if it is part of more comprehensive planning or the investments get better returns than you get on your own (which would go back to your first goal, planning for retirement).

Do you have questions about retirement, Social Security, where to live or how to afford it at all? We want to hear from you. Join the conversation in our Facebook community: Retire Better with MarketWatch.

You mention you're already working with a financial firm, and that you have a personal account on the side. This is a really good place to start, because you can see that something isn't working for you in either area. What you're currently getting from that firm doesn't seem worth it to you, but you're aware your timing is a bit off in your personal account. By the way, what a great lesson to have learned about yourself already. Some people spend a lot of money figuring that out!

What is it about your current financial firm that makes you feel it isn't worth the price? If you're just getting portfolio construction, then maybe the fees for that service aren't justified. You can find another way to create a portfolio for retirement, as well as maybe less expensive investment options.

Finding a financial planner is a bit like dating. You don't necessarily have to go with the first person you find, though it can work out that way.

There are online investment platforms available, sometimes called "robo-advisers," that can allow you to customize your time horizon and investment goals. It will create a portfolio for you based on those factors as well as what you determine to be your risk tolerance. The investments are chosen by an algorithm, so not quite as personal as a human doing this sort of work, but they are typically less expensive than an actual person. Robo advisers charge a management fee somewhere around 0.25% to 0.5% of assets compared to 1% to 1.5% (or more) for a traditional adviser. You can also find them at numerous financial institutions (think Vanguard, Charles Schwab $(SCHW)$, Morgan Stanley $(MS)$ and so on) as well as companies that focus entirely on this service, such as Betterment and Wealthfront.

There is also software dedicated to retirement planning, where you can get pretty granular about projections, such as interest rates, inflation, Social Security benefits (including when you claim or if you expect to get the full amount) and so on. They include Maximize My Social Security and Boldin, the latter of which was previously known as NewRetirement. You do have to pay for these programs, but they're also less money than a financial adviser.

I would be remiss not to mention the benefits of working with a human financial planner - the right human financial planner, that is - when you are looking for something more comprehensive. You or computer programs may not know all the questions, including how comfortable you think you'll be spending down your retirement savings, or if you need long-term care insurance down the line. A qualified professional can also help you make sense of your estate planning, so that you either spend as much as you can of your money while you're alive or try to leave something behind for heirs. If you have preferences for the types of investments you place in your portfolio (such as avoiding companies that do not align with your values), that's something a person would probably be better at accomplishing than an online platform, too.

Finding a financial planner is a bit like dating. You don't necessarily have to go with the first person you find, though it can work out that way. Ask questions like how they're compensated, what their strategies are for picking the right investments for their clients, if you are similar to their general client base and how they adjust to changes you may throw their way through the years.

If you do interview a few financial planners, also ask them how they can help you retire earlier than you initially planned - you might be surprised, and relieved, to hear how someone can help you accomplish that.

Everyone learns differently. Some people learn better by reading, others by listening. The same can be said of retirement planning. You might find the right strategy for you is a mix between independence and some hand-holding, but either way, I'm sure you'll figure it out.

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Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

-Alessandra Malito

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March 07, 2025 06:43 ET (11:43 GMT)

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