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2008 Investment Guide
Got To Have A Plan
Soyoung Ho 12.10.07, 12:00 AM ET

These days even cocksure baby boomers are looking for retirement advice. How to find the best blueprint for you.

In 1999 John Harry Jorgenson began planning for retirement from his job as a Federal Reserve Board lawyer. First he tried free online programs. Then he bought ESPlanner, a software program designed by an economics professor. He found it helpful but wanted more assurance. So Jorgenson, now 62, and his wife, Patricia Johnson, now 60, paid a planner $700 to do a second set of calculations. Then they used a free consultation offered by TIAA-CREF, which administered the plan at the nonprofit where she worked.

All three calculations showed Jorgenson could afford to retire sooner rather than later. He left his full-time job in 2001 but continued to work in part-time and temporary positions until the end of 2005. During those years the Washington, D.C. couple spent only what they'd budgeted for retirement--a further, real-life test of their plan. Today they report themselves shorter on time than money, what with travel, courses at museums and universities and attending opera and pro baseball games. "I felt better after doing all that planning," Jorgenson says.

With the first of 78 million baby boomers turning 62 next year, millions of folks--including well-educated do-it-yourselfers like Jorgenson and Johnson--are looking for retirement advice. And there's no shortage of supposed experts eager to provide it.

The Financial Industry Regulatory Authority lists 15 planning "certifications" with "retirement" or "senior" in them. Some require only a few days of study and are mainly credential-dressing for salesmen hawking annuities, insurance or stocks.

So be skeptical, but don't let it keep you from getting help--whether it be a one-time retirement checkup, specialized tax and estate advice, or continued hand-holding from a pro. Here are some options:

HIRING A PLANNER

If you want advice delivered in person, consider a fee-only planner, meaning one who charges either an hourly rate or a flat rate, as opposed to one who lives off sales commissions. Hourly rates usually fall between $100 and $400 an hour. Fixed fees range from $500 to $5,000. For $500 you'll likely get little more than a computer-generated income projection or asset allocation plan, plus a meeting to discuss it. A more comprehensive plan would include both of those, a review of your estate plan, tax pointers and an analysis of the insurance, if any, you need. Should you decide to retain the planner on a continuing basis, any upfront plan fee might be applied toward your first year's bill; pin this down in advance.

Who hires a planner long term? Through the years Robert Ciske, 68, was too busy running three Wisconsin car washes to manage his own investments. He relied on commissioned stockbrokers whose performance, he says, "wasn't too bad." But in 2003 he and his wife, Judy, now 65, who retired this October from her job as a clinic manager, got serious about retirement planning and decided they wanted more personalized advice.

On a fishing trip Ciske met Ty A. Bernicke, a certified financial planner with an Eau Claire, Wis. firm started by his CPA father--a firm Ciske had heard good things about. After two preliminary meetings the Ciskes hired the son and pay 1% a year of their assets (nearly $1 million) under management. The 1% doesn't cover trading fees or fees within the mutual funds Bernicke recommends but does include tax and financial planning, as well as portfolio management.

Outside of fishing trips and personal referrals, how can you find an adviser? The National Association of Personal Financial Advisors lists 1,700 planners who work only on a fee basis. Another group, the Financial Planning Association, offers referrals to CFPS, regardless of whether they take sales commissions (which most do). Some planners will credit sales commissions they get against their fee. Others won't. Ask.

"Every CFP worth his or her salt will give the client a no-obligation initial interview, to talk about their goals and objectives," says Lewis Walker, a Norcross, Ga. CFP who's been in the business for three decades. "If the conversation shifts immediately to products, you are not talking to the right person."

The CFP designation is no guarantee of competence or honesty, but it's worth a bit more than some other credentials. There are 56,200 CFPs; all have passed a ten-hour exam with a pass rate around 60%. Exam candidates must have a bachelor's degree, three years of experience and complete a CFP Board-registered education program--or have earned one of an alphabet soup of other credentials.

Those include a CPA; a Ph.D. in business or economics; a law degree; or a Chartered Financial Analyst, Chartered Life Underwriter or Chartered Financial Consultant designation. While traditionally most CFPs have worked outside of big firms, Smith Barney and Merrill Lynch (nyse: MER - news - people ) are now encouraging their own brokers to earn CFP credentials, too.

You can run a planner's name through the CFPs' Web site and find out if he or she has been "publicly disciplined" by the accrediting organization. But that won't alert you to complaints that didn't lead to discipline, and the group can't do anything but take away the CFP mark. There is often better information available: Any investment advisory firm that has discretion over $25 million or more can be checked out at the Securities & Exchange Commission's Web site. Individual brokers' histories--including customer complaints and records of bankruptcies--are online at www.finra.org. Records on insurance salesmen can be found on state regulators' Web sites.

Specialized Advice

If you're selling a business, need an estate plan or want tax-savvy advice, consider hiring a CPA, lawyer or planner who works with those specialists. Among today's tricky tax issues: deciding whether to roll over employer stock in your 401(k) into an individual retirement account or cash it out and pay the lower capital gains rate; deciding which type of retirement account to dip into first; and planning for rollovers of regular IRAs to Roth IRAs.

While you don't need a planner who carries a "retirement" certification--which, in fact, could be a substitute for a more meaningful one--tax and other rules surrounding retirement accounts have gotten so complicated that it pays to look for one who serves a retirement-age clientele. One example of the questions they can answer: If you are offered a lump sum in lieu of a monthly pension, should you take it? The answer depends, among other things, on interest rates and your health.

Your Fund Company

If you want a one-time preretirement reality check or an asset allocation plan, look into what's offered by the mutual fund company where you keep your IRA or taxable investments. Some provide individual plans, at a modest price or free, depending on how much you keep there. Vanguard Group charges $1,000 for a plan if you have less than $100,000 invested with it, $250 if you have $100,000 to $500,000, and nothing if you have more. You answer an extensive online questionnaire on your background, finances and risk tolerance, get back a 12-page report and then discuss it by phone with a salaried Vanguard employee who's also a CFP.

T. Rowe Price offers an asset allocation plan for $250, or free if you keep $500,000 or more in assets with it or are transferring $100,000 in funds to the firm. The phone conversation is with a counselor, not a CFP as at Vanguard, and not as many issues are covered.

Both services work best if you keep substantially all of your funds with that firm; in analyzing your current asset allocation Vanguard and T. Rowe will consider your outside investments, but neither will make recommendations to purchase other than their own funds. This year Vanguard began offering the "integrated" portfolio option: It attempts to build your Vanguard asset allocation around what you've got elsewhere, assuming you can't or don't want to sell those other assets.

Your Workplace

The 3.2 million employees of colleges, hospitals and other not-for-profits whose retirement plans are managed by TIAA-CREF generally have access to the most extensive personalized workplace advice. In 2005 TIAA-CREF expanded its free individual counseling; all 600 planners now on staff have at least seven years of experience in financial services and have gone through a ten-month training program. Workers can request "early/mid-career accumulation" or "preretiree transition" sessions at any time and sign up for "retiree" advice one year before the big date. "Even the most competent people are very nervous at this point," observes Maliz Beams, TIAA-CREF executive vice president for individual client services. These sit-downs can last as long as five hours and cover general tax and estate planning advice as well as a specific, written asset-allocation plan.

Meanwhile, as for-profit businesses shift from traditional pensions into 401(k) schemes that put the investment management burden on workers, they, too, are beginning to offer more advice. Mostly, this takes the form of group seminars, workshops and online planning tools (except for top executives who get personal financial planning as a perk). But these offerings are getting more sophisticated and useful, particularly when it comes to asset allocation.

For example, Fidelity Investments, the largest administrator of 401(k) assets, has updated its online tools, offered free. You can link in your non-Fidelity holdings, and they'll be included in calculations of whether you are saving enough and analysis of whether your current portfolio allocation is appropriate. Also free of charge, you can call a Fidelity rep (many but not all are CFPs) to discuss the results.

More employers, encouraged by new federal rules, are offering employees "managed accounts" for their 401(k)s. Financial Engines, the leading provider of these, charges 0.15% to 0.6% of assets a year, on top of mutual fund fees, to pick funds for you based on your assets, age and risk tolerance. So far 200,000 workers at 200 companies use the service.

Software Options

ESPlanner, sold online for $149, is an elaborate program that aims to help you decide the best amount to save, and how much insurance to buy, to maximize your family's consumption over your entire life.

Brentmark Software offers several programs (from $249 to $595) that can be used to compare different strategies for timing distributions from iras, Roth iras and Roth 401(k)s, taking into account federal and state estate and income taxes. Mostly, the software is bought by CPAs and planning pros.

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