As part of its “Managing Retirement Decisions” series, the Society of Actuaries released two retirement planning briefs in December in order to help consumers deal with some of the challenges.

In “Finding Trustworthy Financial Advice for Retirement and Avoiding Pitfalls,” the SOA urges consumers to avoid “all solicitations for financial products,” whether they are offered through the Internet or via cold calls. “Although there is a very small chance of missing out on a good opportunity this way, there is a very big chance of avoiding being ripped off,” according to the SOA.

SOA adds that while friends and family members may mean well, their financial advice is not necessarily to be trusted. Their own financial interests may color their advice, or their willingness to offer advice may be disproportionate to their expertise.

The guide lists characteristics older advisors should look for in a financial advisor.

  • Competence: This one’s a no-brainer, but the SOA warns that some credentials warrant further research to ensure what exactly they say about the advisor.
  • Investment philosophy: The guide warns consumers away from advisors who claim to select superior investments, time the market or sell other market-beating strategies. “It’s more effective to look for an advisor who focuses on understanding the client’s risk tolerance and need for investment return, and on investments that fit their clients’ needs.”
  • Total financial planning approach: The guide cautions that advisors who only recommend one or two products “cannot make good recommendations” because they haven’t taken the time to understand the client.
  • Compensation: Unfortunately, according to the guide, even if investors ask how an advisor is paid, they “may have no way of knowing whether the advisor’s recommendations are biased by the size of the commission.” SOA recommends consumers look for referrals and references for the advisor before they commit to anything.
  • Fiduciary versus suitability standard: It’s a complex topic to address in under 150 words, but the guide explains that licensed registered investment advisors (RIAs) must operate under a “fiduciary” standard; that is, “they must act in the best interests of the client at all times.” The “suitability” standard that most stockbrokers, registered representatives, and insurance agents operate under, according to the guide, requires them to sell products that are suitable for the customer. The guide does mention that the fiduciary standard is under review by the Securities and Exchange Commission and that it may take until at least late 2012 to fully implement the new standards.

The guide also demonstrates how to go about reporting an unscrupulous advisor, noting that it’s critical to act quickly when filing a complaint. The guide also recommends hiring a general family attorney if possible, for help with advice and writing letters.

The second guide, “Big Question: When Should I Retire?” compares retirement to “driving on a long trip with question marks posted in places where there should be road signs.” The guide goes over the basics of Social Security, Medicare and health insurance, pension and savings. It also touches on what consumers intend to do with their time in retirement.

“Individuals and couples should think through what they really want to do in retirement, where they will live and in what type of housing,” the guide recommends. “Then they should assess whether the goals are feasible and realistic.”

The guide then breaks down possible retirement scenarios for a single woman and for a married couple at three different retirement ages.

“Actual results for individuals or couples will depend on the particular circumstances,” the guide concludes. “In the end, those who bring thoughtful study and an inquiring mind to the decision-making task will likely reach the very best solution for their own situation.”