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I’m 70, retired and my husband and I have Social Security, two 401(k)s and an annuity so we ‘live comfortably.’ So do I even need my financial adviser anymore?

MarketWatch logo MarketWatch 1/14/2023 Alisa Wolfson
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Question: I’m 70 years old and fully retired 2 years ago. I am married, my husband has a pension, and we both have Social Security income that helps us live comfortably. I also have two 401(k) accounts and an annuity. I have been diagnosed with cancer and want to start drawing on my investments.  My question is, I don’t see a point in continuing the relationship with my financial advisor. Can I drop him?  If so, how do I do that?

Answer: We are so sorry to hear about your diagnosis, and it’s certainly understandable that you are questioning whether or not to continue your relationship with your financial adviser.  The answer to whether to drop him ultimately depends on such things as how good your adviser is and how much advanced planning is needed. And if you decide to drop him, the good news is that it is relatively easy to do so. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

Should you drop your adviser?

One thing to consider here is whether you feel the financial plan you have in place is the best for both you and your husband both for now and if you pass away. Does it look at everything from Social Security survivor’s benefits to estate planning to tax planning to ensure your husband will be well taken care of? 

“If you feel equipped to address this on your own, then perhaps you don’t need an adviser,” says certified financial planner Joe Favorito at Landmark Wealth Management. But if not, could an adviser (possibly a different and/or better one) actually help make this plan better? Indeed, as Favorito points out, your adviser should have “been able to do some modeling” of possible scenarios for you. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

Have an issue with your financial adviser or looking to hire a new one? Email picks@marketwatch.com.

Consider this: The way you’re envisioning your situation playing out may not make the most sense for you or your husband. “At the risk of being morbid, if the cancer diagnosis is terminal, drawing down the 401(k) may not be the best idea for your surviving spouse since your Social Security doesn’t have a survivor benefit. When both spouses are eligible for Social Security benefits and one spouse dies, the surviving spouse receives the higher of the two amounts, not both. What’s the benefit of spending down the plan if it possibly impairs your spouse’s future income in a significant way? Or imagine the reverse scenario — if your spouse predeceased you and possibly didn’t have a survivor benefit on their pension, you’d lose one of the Social Security benefits as well as the pension,” says Favorito. 

What’s more, do you understand how the pension and 401k(s) work? For example, 401(k) plans typically pass to the surviving spouse with the tax shelter intact, which should be taken into consideration when running a financial plan. The beneficiary who inherits 401(k) assets is responsible for paying inheritance tax, which is something a financial adviser can help  your husband navigate. And have you thought about estate planning concerns that come up as you age, such as asset protection and legacy planning.

“Consider your spouse. Often, an experienced investor will hire an adviser to build a relationship with someone that will be there to help a surviving spouse when they know they won’t be around anymore and the spouse is not as experienced with financial affairs,” says Favorito. All of these are possible reasons to consider maintaining a relationship with your planner.

For his part, certified financial planner Derieck Hodges at Anchor Pointe Wealth says there’s a lot of non-investment work that your adviser may still be able to assist you with like “tax planning, advising and estate work.” (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

Given your cancer diagnosis, Hodges says you should check to make sure every single beneficiary arrangement is complete and that your durable power of attorney is up to date. “All of that is crucial, as is adding trusted contacts to each of your accounts, which most of the big custodians now require,” says Hodges. Especially because you may be preoccupied by healthcare needs, Hodges says he recommends having someone who knows exactly what you have and where, usher you through this chapter. “That way, if something goes sideways, someone can step in and help,” says Hodges.

In the end, the decision to work with an adviser is based on the value you get from it. “If you no longer feel your adviser is providing you with enough value, simply notify them, probably in writing, that you would like to terminate your professional relationship,” says Hodges.

You’ll want to read the fine print in your contract to find out exactly what you should expect when you terminate your relationship with your adviser — as you may have to pay a termination fee or sell proprietary positions instead of transferring them. If your adviser manages your accounts and you’re switching to a new adviser, request copies of your records and ask your new adviser to handle the transfer from the old adviser, or if you plan to manage your own money, open an online brokerage account and have your accounts transferred there. This process can take anywhere between 1 and 3 weeks, although if you have money invested in a hedge fund, you may have to wait 1 to 2 months for the transfer to be completed. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

Have an issue with your financial adviser or looking to hire a new one? Email picks@marketwatch.com.

Questions edited for brevity and clarity.

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