Getting your ducks in a row before you retire

By Don Kuehn

After more than 26 years working for the AFT, traveling around the country, negotiating contracts and assisting locals and state federations, the time is fast approaching when I'll be able to put away my suitcase and become a homebody. There is a light at the end of this tunnel.

Although I have always kept my own counsel as my wife and I built the base for our retirement, I recently decided to do a reality check and consult a financial planner. Part of my motivation? I had become sensitive to the fact that my wife's comfort level with risk is not the same as mine. This is an area where an objective advisor can come in handy.

I asked several people for recommendations. My attorney gave me the names of three local people with whom I spoke by telephone. I finally set an appointment with Darrell Tierney who is with a financial planning firm in Prairie Village, Kan.

I was looking for a fee-only advisor who had earned the designation of certified financial planner (CFP). While almost anyone can claim to be a financial planner, CFPs must meet standards of education, experience and ethics as well as pass a stringent examination before they qualify to use the designation of the CFP Board of Standards.

Planners make their living in one of three ways: commissions on what they sell, fees charged to the client or a combination of the two.

With commission-based planners, there is always the lingering suspicion that certain investments are recommended as a way to nail down that trip to the Bahamas or to generate the greatest income for the planner. For my money--and it is my money--fee-only is the way to go.

Even among fee-only planners, there are options. You might agree to an hourly rate, a flat rate for the planning to be done or a fee based on a percentage of the value of the assets in your portfolio. Not all CFPs work the same way.

Before our first face-to-face meeting, Tierney sent me a hefty packet of information including his Form ADV, which is required by the federal government. When looking for a planner, insist on a copy of this form. It reveals a lot about how a person conducts business--including fees and compensation, potential conflicts of interest, the types of investments typically recommended and the kinds of clients served by the firm.

When we met, we were able to skip some of the basic investment stuff. We compared our overall philosophies of investing and discussed the range of services Tierney's firm offers. It can provide any level of service the client desires from asset allocation advice to full-service planning, quarterly review and tax preparation; it can even forward monthly checks directly to the client's bank account.

We talked about income needs, investment strategies, preservation of capital, income-generating investments and the like. Because Tierney's firm receives no fees from the investments it recommends, it uses only no-load mutual funds to achieve the client's growth and income goals. We also talked about my fairly aggressive investment approach and the somewhat more conservative attitude expressed by my wife. His job, after all, is to mediate between the two.

I made it clear that I was willing to pay for "proprietary" advice, but that I was not going to pay for advice that I could duplicate through any of several sources readily available on the Internet. Sources like Vanguard, Fidelity, Quicken and others have very good retirement planning packages on their Web sites. Take a look.

Probably the most common fear among retirees is whether they will outlive their money. In my next column, I'll share some of the insights and strategies Tierney suggested to rebalance our portfolio and to meet our cash-flow needs without "eating our seed corn."

# # #

Part 2: How to work with a fee-only certified financial planner