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Follow the Money

The road to success is in retirement plan asset rollovers.

By Donald Ray Haas, CLU, ChFC, CFP, RFC, MSFS

If your earned income is below par, maybe you are looking in the wrong direction. The financial services business is pretty simple—you go where the money is. Think about it this way: Most of our income equals a percentage of our clients’ money.

If you receive a commission, it is usually a percentage of either what “passes through your hands” or a percentage of the amount that remains wherever you put it. If you receive a fee, it is usually based on the amount of money you are assessing. Of course, a possible exception is if you are a salaried financial planner. However, a salaried financial planner’s income will decrease or disappear if he is not providing any value to his clients.

So, where is the money? It is all over the place and it is abundant. The key is knowing where to look and how to tap into a virtually untapped market.

That golden market is retirement plan asset rollovers. Do not miss out on this great transfer of wealth. Rather, ask yourself: What percentage of these trillions of dollars will I earn? The answer will depend largely on the direction you begin traveling right now.

Here are some key defining questions you should be asking about your professional practice:

  • Have I opened my mind to exploring new aspects of the financial services market?
  • Am I stuck with only one product line or planning concept?
  • Am I still calling myself a life insurance agent?
  • Am I trying to broaden my knowledge of financial services and stay abreast of the latest financial planning strategies and tax law changes?

Asset rollovers
When you think of qualified money as an annual contribution, you are talking peanuts. Instead, what you should be concentrating on are those accounts that have accumulated over time, and at some point will be transferred or rolled over into self-directed IRA custodial accounts. If you facilitate this process, you will receive a percentage of all those large sums of money for your services.

Getting started
So where do you start? First, find an IRA custodian to work with. I use First Trust Corporation in Denver, Colo. Be sure to review the IRA custodian’s costs like minimum charges, charges per investment in the account, transaction fees and distribution and termination fees. Regardless of the situation, understand your client’s potential cost of the type of account with which you are associated. Ask others about the custodian’s cooperation, assistance, accuracy, timeliness, and other services like Internet account access.

When you present the concept of a “self-directed” account to your client, explain that it is his life and money, and he should be in control and be able to invest it in whatever way he chooses. You are there to assist him in all areas, including investment advice, administration, and compliance with the laws affecting these accounts.

Regardless of your type of compensation, there is the potential for you to earn significant amounts of money. Rollovers could be just one part of your successful practice or could easily become your entire specialty.

Target wealthy, aging Baby Boomers
The oldest Baby Boomers are 57 years old in 2003. While some are retiring now, a whole bunch will retire in a few years, and 76 million will retire over the next two decades. Baby Boomers have accumulated large IRA, 401(k), 403(b), Keogh and SEP accounts. Over the next few years, these accounts will outgrow their current confines and a self-directed IRA—or whatever its name will be in the future—will be the answer.

Most defined-benefit plans have a lump-sum distribution option and a lifetime-payout option. Most of these lifetime payouts are not adjusted for inflation. Put these facts together and you have an obvious solution to an increasingly inadequate level payout. Factor in longevity, and a self-directed IRA makes even better money sense because the client, with your assistance, may develop a portfolio that can increase its purchasing power.

So, what future direction will you travel? Follow the money.

Donald Ray Haas, CLU, ChFC, CFP, RFC, MSFS, of Southfield, Mich., has been an insurance agent and financial consultant for 47 years. You may reach him at 248-213-0101 or at (Member NAIFA, Southeast Mich.)

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