Do you need an investment adviser?

  @Money February 12, 2013: 10:25 AM ET
investment fees chart

Once you start living off your savings, high investment fees make it more likely you'll deplete your retirement stash.

NEW YORK (Money Magazine)

This story is part of Money magazine's story 5 retirement choices: Get 'em right, live well which covers big decisions that can dramatically boost your income in retirement.

Once you determine how much of a saver you are, you have several more decisions to make -- including whether you should pay for the advice of a financial planner.

Decision No. 3: How much help do you really need?

The decision: As you get deeper into retirement investing, you may find yourself at a crossroads: Should you go it alone -- set your own asset allocation, choose funds, monitor your progress, make adjustments -- or do you need professional input? In retirement, can you tackle the tricky drawdown solo?

There's no one right answer. The decision comes down to your comfort level and confidence, plus your ease with the online tools that make a DIY approach easier.

Why it's important: You can pay the skimpiest fees possible by picking index funds yourself.

If you prefer giving your money to an active fund manager in hopes of beating the market, you'll pay another half a percentage point or more a year. And turning your money over to an adviser can add 1% a year to your costs.

Related: Which type of financial planner makes sense for you?

The benefit of holding the line on expenses is pretty intuitive when you're saving for retirement. The less you spend on fees, the more of your gains you get to keep. Over a 35-year career, paying one percentage point less annually can mean a 20% larger nest egg.

Keeping a lid on expenses after you've retired is equally important. By reining in costs you may be able of reduce the chances of running out of money. And you'll be able to draw more from your portfolio every year.

Best move: Take advantage of free asset allocation and investment selection tools in your company's retirement plan or at fund company sites.

The right investing strategy for you

Last year the Department of Labor began requiring employers to be more transparent about 401(k) fees, which should make it easier for you to home in on the lowest-cost investments in your plain.

Related: Long-term investing - Keep it simple

Outside your plan, you can turn to online tools like Morningstar's Fund Screener, which allows you to sort funds by their expense ratios. And our MONEY 70 includes ETFs that charge as little as 0.05%.

When you do need help, say as you're ready to retire or retired, an alternative to paying a pro 1% of your assets a year is to periodically have a planner evaluate your progress. You'll pay $150 to $200 an hour, or about $1,000, assuming about five hours for the checkup.

See more decisions you need to get right

Are you a saver or an investor?

How should you divide your money?

What's the best use of tax-deferred plans?

How much can you draw from your savings? To top of page



Join the Conversation
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.28%4.41%
15 yr fixed3.30%3.33%
5/1 ARM3.30%3.34%
30 yr refi4.31%4.39%
15 yr refi3.35%3.31%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.