The latest trick being used by many financial advisors and firms
to get you to invest with them or buy their crappy products to provide value to their clients is to imply that they can help you navigate through the complex process of evaluating the seemingly infinite number of options available for taking your social security benefits. But be careful, this advice could come with a very heavy price tag!
To be sure, how you take your Social Security is a very important decision, with many options, and there is definitely a degree of complexity. You want to balance the pros and cons of the different filing techniques with your health, overall financial needs, and tax situation as well. It is wise to try and get as much as you can out of the system – and good guidance from someone with experience in this area can help you make a good decision.
There is currently a mad dash between advisors and firms to be the “expert” on Social Security – the go to source that people turn to for help in making this decision. And it makes a lot of sense – if you are going to be receiving advice on how to prepare for your retirement, seeking out someone who knows how to help you integrate Social Security into your overall process is smart.
If you want help with this, there will be no shortage of advisors that would be glad to set-up a meeting. And they will likely ask you to bring in information on your assets. This is legitimate since your overall financial situation impacts your decision. BUT don’t be surprised when they look at your investments and start to roll they eyes. It is likely they will have “recommendations” on how they can help you manage those assets too. They might say things like “How did you end up investing in this stuff?” or “Who is managing this money for you?” or “So, you just let these sit here, no one is watching your funds for you?” or whatever else they will say to imply that you face financial peril without their assistance.
So be clear about what is at stake. My belief is that most advisory firms are using this tool to grow their business – they want your assets. That is the payoff. You get help – they get your assets!
An approach you could take before meeting with an advisor is to ask them how much they would charge to simply help you on this particular issue. Would it be $100 – or $300 – or $500. Maybe $1,000 or $1,500. See what they say. (Frankly, while we don’t charge separately for this, I think several hundred dollars would not be a bad price to pay for getting good advice on this issue.) They might not have any idea how to price out their time. They might be surprised that you even asked. But proceed with caution if they say it is just part of their service to clients, or it is free, or if they press hard for a meeting without disclosing how they will be compensated for their time.
At PlanVision, we use Finance Logix as our on-line financial planning tool. We like it and it is a good tool to help our clients plan for their future. It uses Social Security Timing to help our clients evaluate their options and “optimize” their decision. In addition, for an annual fee of $400 (our clients do not pay this fee), we use their upgraded planning feature to provide more information to our clients during their evaluation. While we are not experts on this, we believe we should be competent in this area and able to help out our clients that ask for our guidance. But we are also proud that we are not promoting it as a service we can provide while having a separate agenda – getting more assets under management.