Financial security doesn’t have to be a distant prospect, or something attainable only by high-income earners. Being financially secure looks different for everyone, and can involve seeking guidance from professionals. Many members, especially as they’re nearing retirement, bring on a financial advisor to support a more secure future.
What type of financial services do they provide?
A financial advisor can offer personalized guidance on how to avoid common pitfalls and reach your goals. They are often used during a transitional period in one’s life, such as nearing retirement, marriage or divorce, or receiving an inheritance, but can be tapped at any time.
Think of them as a personal trainer for your finances. If you’re seeking professional guidance and want to be held accountable, a financial advisor fits the bill.
How do they earn their money?
There are two ways in which financial advisors earn their income. There are fee-only financial advisors who earn money from the fees you pay for their services. For example, you may be charged a percentage of the assets they manage for you, or you may be charged an hourly rate or even a flat rate. Typically, financial advisors who are paid in this manner are almost always fiduciaries.
There are also financial advisors who are commission based. This means they earn their money from third parties, which is why they’ll advertise themselves as “free” because you aren’t charged a fee to use their services. If a financial advisor is commission based, they aren’t fiduciaries, but rather work in a sales capacity for investment and insurance brokerages.
Some financial advisors may even work as a combination of the two, such as those who offer advice on products like life insurance.
Use FINRA’s BrokerCheck
The Financial Industry Regulatory Authority (FINRA) has a free tool called BrokerCheck where you can research the background and experience of financial brokers, advisors, and firms. You can find out instantly if a person or firm is registered, as required by law, to sell securities (stocks, bonds, mutual funds and more), offer investment advice, or both.
BrokerCheck also gives you a snapshot of a broker’s employment history, regulatory actions, and investment-related licensing information, arbitrations, and complaints.
After you pick a financial advisor
While CalPERS can’t offer financial advice, we can offer you resources that’ll assist you and your financial advisor.
For example, our Retirement Estimate Calculator is a great tool to share, as it uses the latest data as reported by your employer to get an idea of what your monthly benefit might be.
If you have a deferred compensation plan, such as a CalPERS 457 Plan, a CalPERS Supplemental Contributions Plan, or a Savings Plus Plan, this would also be information your financial advisor would want to consider.
If questions come up that your financial advisor needs you to address, we can help you find the answers in a few different ways. You can register for a class, or attend our CalPERS Benefits Education Events (CBEEs) where you’ll get answers to your specific questions. Visit our Member Education page to get more details about our various learning opportunities, which we offer either in-person or virtually.
You can also call us Monday through Friday from 8:00 a.m. to 5:00 p.m. at 888 CalPERS (or 888-225-7377), or schedule an appointment with us in person at one of our eight regional office locations. To schedule an appointment, log in to your myCalPERS account and select the Education tab, then Appointments.