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Roth Conversion

Choosing the Right Financial Advisor in 5 Easy Steps

Preparing for retirement can be overwhelming, and between tax, estate, insurance, and investment planning, some important aspects of your financial plan can be easily overlooked if you’re not working with a competent professional. A qualified financial advisor can help you ensure that all items are being considered, but not all advisors are created equal. So how do you decide who to work with?

With endless options available, choosing a financial advisor can be difficult. However, there are certain qualities to look for to help you narrow down your choices and make sure you find a qualified advisor that best fits your needs.

Why do you need a financial advisor? Today’s financial landscape is as complicated as ever. A good financial advisor can help you navigate this complexity so that you can make educated, informed decisions on what is best for you and your family. 

1. Ask for references. Ask your CPA or estate planning attorney. In many cases, they already have a working relationship with a financial advisor. You should also consider asking friends and family members for a recommendation if they are in a similar stage of life and financial situation. 

2. Don’t overemphasize credentials. It seems as though there are many credentials available to financial advisors. Some credentials require significant levels of education, passing scores on exams and adherence to strict codes of professional conduct. Many credentials, however, can be earned with virtually no effort or education at all. The bottom line is that the decision of what financial advisor to hire should be made based on more than just the letters after their name. 

3. Find a specialist. The term “Financial Advisor” is highly generic and can be used to describe many different types of professionals in the financial services field. When shopping around, find an advisor who specializes in your area of concern. If you had a heart problem, would you rather see your family doctor or a cardiologist? The same principle should apply to your financial advisor. 

4. Ask about education/training. Most financial advisors routinely participate in what are called “advanced training” classes. Many times these classes are heavy on sales training and light on “real” education. If you really want to know what your advisor has studied, ask to see the manual from the last educational conference he or she attended. If it has more sales information than technical information... Beware!

5. Don’t be afraid to get a second opinion. Your IRA, 401(k) or other retirement account may be the largest single asset you own. If you’re not sure about the advice you’ve been given, don’t be afraid to get a second opinion. If an advisor tells you that there’s no need for one, they’re probably not confident in the information and recommendations they provided to you in the first place. 

Questions? Click here to contact the office nearest you.

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UPDATE!! Roth Conversions: No More Do-Overs

One of the many sweeping changes resulting from the new tax law is that you can no longer recharacterize, or undo, a conversion from a traditional IRA to a Roth IRA. Thus, under the new law, Roth conversions are irrevocable.

What does this mean for you?

You may determine a Roth conversion is right for you after working with a qualified financial professional to consider a variety of factors, including when you will need the money and your current tax rate. When you convert, you are liable for income tax on the amount converted.

Until the passing of the new tax law, you had until October 15 of the year following the conversion to change your mind. Reasons for wanting to undo a Roth conversion might include a decline in value of the converted funds or a change in life circumstances that leave you unwilling or unable to pay the tax on the conversion. With the new law, however, the decision is permanent.

The key takeaway is that before you do a Roth conversion, you must be sure that you have the funds to pay the projected tax bill on the conversion.

Given its permanence, the decision to convert your traditional IRA to a Roth IRA will require careful planning. It is more important than ever to be working with an advisor who is well-trained in the intricacies of laws that impact retirement accounts.

Feel free to call our office to schedule a time to discuss your retirement account. Click here to contact the office nearest you.

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