Investment Advisors in Pennsylvania

What Pennsylvanians actually hold

Pennsylvania households do not all look alike on a statement. According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, per capita income is about $44,355 and about 35.2 percent of adults hold a bachelor’s degree or higher, and the state is older than most. Many people hold a defined benefit pension or a union plan, a 401(k) or 403(b) from a long career, savings in bank accounts and a house they have owned for decades. Others in the southwest and the northern tier collect gas royalties, and rural families own land.

An advisor builds the portfolio around that mix. A person with a pension that covers most of their spending can generally hold more stocks in their savings. A person whose wealth is mainly land needs liquid, diversified holdings. A person with variable royalties needs a plan for the good months and the lean ones.

What an advisor does

Expect the first meeting to center on you: what you want, when you need it and how you felt the last time markets dropped. The advisor then proposes a mix of stocks, bonds and cash, chooses the funds and sets a review calendar. Afterward the work is steady maintenance. The mix gets rebalanced when markets drift, losses get harvested for tax purposes and the plan is updated after retirement, a death or an inheritance. Under a signed discretionary agreement the advisor places trades for you, and otherwise you approve each one. Our investing basics guide explains the building blocks.

The Philadelphia suburbs are home to several large fund and insurance companies, and Pittsburgh has its own banks and trust departments, so Pennsylvanians have plenty of local choices as well as national and online ones.

The state tax twist

Pennsylvania taxes interest, dividends and capital gains at its flat rate, with no preference for long holding periods. It also taxes your own 401(k), 403(b) and similar contributions on the state return, while exempting qualifying retirement withdrawals. That has a few consequences for investors.

• A traditional contribution lowers federal tax but not state tax. In most states the state tax break is a reason to prefer traditional accounts, and here it is not, so a Roth can look better than it would elsewhere.
• Withdrawals from retirement accounts in retirement are generally exempt, so gains inside the account are not taxed again by the state, which makes retirement accounts especially valuable for assets that grow fast.
• Interest on Pennsylvania municipal bonds is generally exempt from state income tax for residents, and interest on most municipal bonds is exempt from federal tax. Bonds from other states do not get the state exemption.
• Gains in a taxable account are taxed at the flat state rate when you sell, so holding broad, low-turnover funds helps.

Our tax planning guide explains the federal side.

Investing with a pension

Many Pennsylvanians retire with a pension from a union, a utility, a school district, the state or a manufacturer. Because it pays a check for life, the pension plays the role of a large bond in the household balance sheet. An advisor can use that fact to decide how much risk to take with the rest. A retiree whose pension covers all their basic spending can hold a larger share of stocks and ride out a market decline. A retiree whose pension covers only half can choose a more cautious mix.

The pension’s survivor option matters too. If it stops at your death, a spouse’s income will fall, and the portfolio or life insurance may have to fill the gap. Our retirement planning guide explains how an advisor combines these pieces.

Landowners and royalty income

A gas lease can turn a farm family into investors almost overnight. A signing bonus arrives as a lump sum, and royalty checks follow, rising and falling with production and prices. The temptation is to spend them, and a better path is to decide in advance how each check is split among taxes, a cash reserve, long-term investments and spending. An advisor also looks at how much of the family’s wealth now sits in a single asset, the land, and whether a diversified portfolio built from the royalties makes sense. Because production declines as wells age, royalties should not be treated as permanent income. Estate planning is part of the picture, since Pennsylvania taxes inheritances and mineral interests can be hard to divide among heirs. Our estate planning guide covers trusts and beneficiaries.

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Moving money from an old plan

People who change jobs or retire often face a choice about an old employer plan: leave it, roll it into an IRA or move it to the new employer’s plan. An advisor compares fees, fund choices and special features, such as stable value funds or low-cost institutional share classes that a rollover might give up. A direct transfer avoids taxes and penalties, while a check made out to you can trigger withholding. Public school and some other workers have a 403(b) or 457(b) with a long list of vendors, and the fees can differ a great deal, so ask for the cost of each investment before you add money.

Saving for school with PA 529

Pennsylvania’s PA 529 College and Career Savings Program has two options: a Guaranteed Savings Plan tied to tuition inflation and an Investment Plan with market portfolios. The state lets residents deduct contributions to any state’s 529 plan within annual limits, so the plan can be chosen on fees and fund quality instead of the tax break. An advisor compares the options, suggests an age-based portfolio that grows more conservative as the child nears college and shows how to balance the goal against your own retirement saving, since students can borrow for school but you cannot borrow for retirement. Our college savings guide explains the rules.

Cash, bonds and the first years of retirement

A market decline in the first years of retirement does more damage than one later, because withdrawals lock in the loss. Advisors respond by keeping a year or two of spending in cash and short-term bonds, so the stock portion has time to recover. In a state where many retirees also own a house with rising repair bills and pay high school property taxes, that reserve does double duty. It covers a new roof without a forced sale of stocks, and it covers the first property tax bill after a market drop. The size of the reserve depends on your pension and Social Security: the more guaranteed income you have, the smaller it can be.

Fraud and how to protect yourself

Older investors are frequent targets of investment fraud. Be cautious about anyone who promises returns, pressures you to decide fast, asks you to wire money to a person or sells a product you cannot explain. Schemes that spread through churches, clubs and families are common. The Pennsylvania Department of Banking and Securities publishes warnings and takes complaints, and it can confirm whether a seller is licensed. A real advisor will give you a Form ADV and name the custodian that holds your money.

Advisers, brokers and costs

Registered advisers must put your interests first in giving advice and usually bill a fee. Brokers answer to FINRA, are held to a best-interest standard on recommendations and usually earn commissions. Some people hold both licenses, so find out which one applies to each recommendation. Smaller advisory firms register with the Pennsylvania Department of Banking and Securities, and larger firms with the SEC. Check the firm and the person on the SEC adviser database and FINRA BrokerCheck, and read Part 2 of the Form ADV.

Funds charge their own expenses, so ask for one total.

Choosing an advisor

1. Explain your situation: a first portfolio, a pension choice, royalty income or retirement withdrawals.
2. Look the advisor up with the SEC, FINRA and the state securities department.
3. Go through the Form ADV Part 2.
4. Learn how taxes are handled and whether your CPA is involved.
5. Request the total yearly cost on paper.
6. Weigh at least two advisors against each other.

Frequently asked questions