Answers To Roth IRA Conversion Questions

At the Financial Advisor Webinar Series on December 11, Ben Norquist of Convergent Retirement Plan Solutions delivered a presentation that was highly rated by attendees about how advisors can seize the 2010 Roth IRA conversion opportunity.



Norquist showed a simple web-based application he developed that makes it easy for advisors to calculate complex conversion scenarios to show the net benefit of conversion.



The tool's strength is that it allows you to dynamically on-the-fly change variables affecting a client's conversion options. The variables include future tax rates, the amount of cash available to pay income taxes incurred on the withdrawal of assets being converted from traditional IRAs or qualified plans, the monthly withdrawals of the IRA owner for living expenses, what you'll earn on a traditional IRA that's not converted, required minimum distributions on the traditional IRA, and the amount left for beneficiaries.



While the software is a one-trick pony and is only good for Roth IRA conversion calculations, the opportunity to advise on Roth IRA conversions justifies the software’s $600 perpetual license fee. I don't believe any of the financial planning applications can make these dynamic calculations and illustrations on the fly, making it a great app to work with live in front of clients.



To receive CFP CE credit for this session and dozens of other webinars, please join Advisors4Advisors.



You can also see a replay of the session (without getting CE credit) at the Financial Advisor Webinar Series page on Advisor Products’ website.



At Norquist's session, we had more questions from attendees than we could answer. So Norquist sent me answers to some of the questions we did not have time for. Below are four of the 15 questions he sent me answers for. To see the rest of the Q&A, please join Advisors4Advisors.







Q: Does the five-year rule apply to distributions made from Roth Conversions after age 59½?

A: No. The five-year rule that applies specifically to Roth IRA conversion assets is only pertinent in situations where an individual under age 59½ takes a distribution of conversion assets within five years of the conversion transaction.



Q: Can an individual with a 401(k) plan convert even if he is still employed? Must the plan allow for in-service distributions? If allowed, can this be converted directly into a Roth IRA or must it first go into a traditional IRA?

A: A 401(k) participant can potentially take a distribution of 401(k) assets for Roth conversion purposes provided the plan he is covered under contains some type of in-service withdrawal provision. If an individual is able to request an "eligible rollover distribution" from his 401(k) plan, he can elect to roll over (i.e., "convert") the distribution directly to a Roth IRA without first going through a traditional IRA. (If the 401(k) distribution occurred during 2009, the individual would be subject to the $100,000 income restriction on Roth IRA conversions.)



Q: Can you address re-characterization options if the market should go down after the point of conversion?

A: The re-characterization option basically allows you to "rewind" a Roth IRA conversion and treat the transaction as if it never happened. In situations where the market value of your IRA assets declines following a Roth IRA conversion, the re-characterization option can provide you with the opportunity to undo your original conversion, thereby avoiding an income tax liability on the value of the assets at the time of original conversion. It should be noted that you cannot re-convert the same assets until the latter of a) January 1 following the year of original conversion, or b) 30 days following the date of re-characterization.



Q: What about the impact of estate taxes on Roth IRAs as Income in Respect of a Decedent?

A: Both traditional IRA assets and Roth IRA assets are included in a decedent's overall estate when assessing potential estate tax liability. Part of the beauty of Roth IRA conversion is that, by paying taxes up front, an individual is able to reduce the overall value of his or her estate, thereby potentially decreasing the amount of estate tax liability. While it is true that the beneficiaries of deceased traditional IRA holders are potentially eligible to take subsequent tax deductions due to Income in Respect of a Decedent (IRD), some financial planning professionals believe it is often more beneficial to reduce the aggregate estate tax liability rather than depending on recouping taxes over a period of years through the IRD deduction.








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4Q09 Quarterly Market Summary Available To RIAs


Advisor Products’ Quarterly Market Summary becomes available Monday for the fourth quarter of 2009.



QMS is a comprehensive analysis of activity in stock and bond markets and examines a range of asset classes.



It is utilized as a companion piece with quarterly performance reports provided by RIAs.



Written by a veteran financial reporter and edited by one of the nation’s leading financial editors, QMS is delivered to subscribers as an eight-page Microsoft Word document 10 days after the end of every quarter. You can cut, paste, and edit QMS to fit your needs.



Each quarterly release of QMS typically covers performance of:





  • S&P 500 large cap stocks




  • Russell 2000 small cap stocks




  • Growth versus value stocks




  • Corporate earnings




  • Foreign stocks




  • Emerging markets




  • U.S. Dollar versus Euro




  • Fixed income markets




  • Two versus 10-year Treasurys




  • Corporate bonds




  • Economic growth




  • Fed interest rate policy




  • U.S. Retail sales




  • Consumer confidence




  • Unemployment




  • Consumer Price Index







Because of the time sensitive nature of the content, QMS is submitted for review by FINRA only after it is distributed to RIAs. Registered reps, therefore, should consult with their broker/dealer about its use.

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Website Compliance System Upgraded For Broker/Dealers And Advisors

Advisor Products this week upgraded AdvisorSites Compliance Engine to streamline advertising compliance for independent advisors and broker/dealers.



Advisor Products hosts websites for 1,200 independent advisory firms, and provides them with AdvisorSites BackOffice, a content management system that enables technology novices to add new text, graphics, and pages to their websites.



AdvisorSites Compliance Engine (ACE) is a component of the BackOffice content management system. When an advisory firm changes tax, graphics, or pages on its website, ACE automatically notifies the advisory firm's compliance specialist, typically at an independent broker/dealer. ACE can be enabled on any firm’s website and provided to broker/dealer or compliance consultant.



With ACE, a compliance specialist can accept, reject, or require revisions to the content, and the changes made by the advisory firm must be submitted and then approved by the compliance specialist before they are displayed on the firm's website.



The upgrade to ACE eases the workflow and organizes information between the advisory firm and its compliance officer when changes are needed to the advisory firm’s website. Here's a summary of the new features.



Attach Notes. An advisory firm can attach a note to any new content it submits for approval and the note is visible to the compliance analyst reviewing the content. An advisor can attach a note to a submission telling the compliance analyst that the content was previously approved and providing a reference number for the earlier submission, or an advisor can simply attach a note to a submission for his own reference.



A compliance analyst can also attach notes to a submission. If, for instance, content submitted by an advisory firm is rejected and requires changes, the compliance officer in rejecting the content can attach a note about changes required for approval.



Compliance History. The entire compliance history of each page of the advisor's website is saved and available to the advisor and so are all notes attached to each submission. The Compliance History Report lists dates of all content submissions and their results. An advisor and B/D can go back and see when a page on the website was last changed, or how long it takes for a compliance analyst to review submissions.



The Compliance History Report creates an ongoing record that the advisor and B/D compliance officer can make available in the event of an audit by FINRA, or state or federal securities regulators. The report displays the compliance history an advisory firm's entire website or the history of a particular page.



ACE has been used by scores of independent broker dealers for over a decade. It also automatically creates archives of advisory firm websites whenever changes are made to a site.



While ACE is used predominantly by independent broker/dealers to streamline compliance workflow, it can also be used by Registered Investment Advisers to outsource advertising review to a compliance consultant.



Advisor Products added the new features to ACE after a compliance analyst at a broker/dealer suggested ways to ease his workflow. If you are an independent broker/dealer or RIA and have suggestions for improving Advisor Products systems, please let me know.








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Is This New Tool What Life Planning Needs?


Life planning has influenced financial planning enormously over the past decade but it is still in its infancy and not widely embraced by the independent advisory industry. I doubt the new tool I am about to tell you about will change that single-handedly, but it may be a step in the right direction.



While leading financial advisory firms have embraced life planning, the vast majority of financial planners do little or nothing to incorporate the “soft” side of planning in their practices.



For example, George Kinder, a founding father of the life planning movement, and his organization, The Kinder Institute of Life Planning, the leader in the training life planners has trained only about 1,000 of the nation’s 60,000 CFP licensees. Why has this style of planning, which has been embraced by many leaders of the industry, not achieved deeper penetration?



Largely because it takes a significant effort to enter life planning. For instance, Kinder Insitute’s program involves an intense five-day training program and six-month mentorship, which can earn a practitioner a Registered Life Planner designation. Money Quotient, a relative newcomer to training advisors in life planning, offers a three-day training program that incorporates practical tools and processes that can be implemented by its licensees. These programs require a major commitment.



It's difficult to change your business model and invest the time and resources to revamp your practice in even the best of times. Doing so in the wake of the financial crisis is even more difficult.



Now, in a move that is likely to be derided by advisors who have been trained as life planners by one of the established educational programs, let me introduce you to a new life planning solution for advisors who want to dip their toe in life planning without making a huge commitment in time and money.



To read my full article, please join Advisors4Advisors.

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A Powerful Search Engine For Advisors



A4A aggregates news for advisors. Every business morning by 8:30 a.m., we post the major news stories advisors need to read and email it to members. Now all of that, along with our own content, is searchable.



Essentially, Advisors4advisors' news aggregation is a searchable database for advisor information.



The power of that is big. We're reading all of the trade magazines, and many sites that are off the beaten path, to create a reading list for advisors every business day. It's the best of the best articles for advisors, a huge time saver.



Mary Rowland, who wrote a personal finance column every Sunday in The New York Times for about a decade, aggregates the market and economy news. Bob Casey, former Editor of Bloomberg Wealth Manager, aggregates the industry news each morning, and I aggregate technology news.



All of the news we aggregate is indexed by our site’s search engine. So when you run a search on A4A, you're searching our collective database of major stories from many trade publications and industry-related websites.



For instance, A search of the term "rebalancing" turns up 16 results from a range of websites frequented by advisors plus a few that advisors probably don't read, like the SEC's website.



If you compare A4A's search results to other sites frequented by advisors, you'll also see how our tight focus on practice management provides information not available anywhere else.



Of course, the search feature is only one small part of what Advisors4Advisors delivers. Among the many other benefits you get by joining Advisors4Advisors:






  • Reviews by advisors of all software products used in the industry—like product reviews on Amazon.






  • Blogs by experts on compliance, technology, operations, document management, and other topics.






  • A social network of advisors using the same CRM, financial planning, and portfolio reporting systems as you.






  • A way to compare advisor software applications feature-by-feature, side-by-side.






  • Free CFP CE credit 24/7 for replays of the weekly Financial Advisor Webinar Series.





At $60 a year, we're providing a lot of value. But don't take my word for it.



Check it out yourself. Register now for a free one-month trial.

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Attendees Comment On Roth IRA Conversion Webinar


While we normally average a 4.2 rating from attendees, last week’s session of the Financial Advisor Webinar Series received a 4.4.



The session offered ideas about how to advise clients on Roth IRA opportunities. While entitled, Seizing The Roth IRA Opportunity,” it was not so much about jumping on the marketing bandwagon for Roth IRA conversion as it was about the complexity of the conversion decision.



Featured presenter Ben Norquist of
Convergent Retirement Plan Solutions illustrated the dynamics of the conversion decision using a tool he recently launched, the Roth IRA Conversion Optimizer.



Here are the unabridged comments attendees provided us in the exit survey:





· It was one of the best Roth seminars I have attended.

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Hardware For Protecting Client Data: A Highly Rated And Fun Webinar

Advisors who attended last Friday’s webinar on secure hardware generally gave the session very high ratings.



We managed to have some fun with this very serious topic when we raffled products provided by each of the vendors. Before the session, I wrote down a series of numbers between 1 and 100 and attendees chatted in guesses. (Though I momentarily feared the chat surge might crash the webinar, we averted disaster.)



Seagate donated a Dell Latitude D620 Notebook with a self-encrypting hard drive, which was won by Ross Heart of Heart Capital.



IronKey provided three of it 4 GB USB drives, which were won by Linda Cordoba of John Lyman Wealth Advisors, Mary Rose Sanger of Legacy Capital Partners, and Art Papale of QS, Inc.



Five one-year licenses to Lo-Jack For Laptops were awarded to Gene Gurley of Miller Equity Capital Advisors, Jason Kley of Vector Wealth Management, Susan Burns of Hall & Burns Wealth Management, Cheryl Morhauser of Cheryl Morhauser & Associates, and Adam Mosely of Charles Schwab.



While we normally try to avoid product pitches at the Financial Advisor Webinar Series, presenters were asked to talk about their products because that was the best way to tackle a topic so far afield from wealth management. Judging from the attendee comments, the direct approach worked just fine.



The three presenters each had a different security solution for advisors, but advisory firms probably need all three to begin to create a secure environment for client data.



Seagate’s Joni Clark talked about self-encrypting hard drives that come built into Dell, Lenovo, HP and other PCs and provide encryption without degrading performance. Hardware-based encryption is very different from drives secured by adding software and it is widely regarded as the strongest protection from traditional software attacks because the full drive is always encrypted and the encryption keys never leave the drive.



IronKey’s John Jefferies talked about his company’s secure USB drive that essentially self destructs if someone incorrectly enters a password repeatedly, and it also has a password management program, is waterproof, scans for malware, provides protection against key loggers, and other features.



Absolute Software’s Pam Seale spoke about LoJack for Laptops, a product that can be found at Best Buy and other retail outlets and that is an add-on option for many new computers. If your computer is lost or stolen, not only can police track it down but you can disable the drive remotely.



Join us this Friday, December 11 at 4 ET for our next webinar, when our presenter will be Ben Norquist of Convergent Retirement Plan Solutions. Ben specializes in teaching and training advisors about all aspects of the qualified retirement plan business and is focusing this session on how advisors can talk with clients and prospects about the Roth IRA conversion opportunity. This is the biggest strategic financial decision clients have had to make since the financial crisis. Norquist says that if you do not by the first of the year have a strategy for approaching and advising on a Roth conversion, you’ve probably missed the chance to get it right.



Below are the unedited comments submitted by attendees who were kind enough to fill in our survey and provide feedback about last week's session. Apart from one person who thought the session was “boring” and a couple of advisors who thought it was too technical, attendees appreciated our deep dive into a technology topic that does not get much attention in the trade press because it is so technical.



Here are the comments we received.



· Very good except for audio on the first speaker.



· Excellent. I will be purchasing each presenter's products in the near future.



· Improve it......make me a door prize winner :-)



· Very practical solutions to an important problem.



· It was great. Thanks for the opportunity to win things we can use in the office.



· Please create a compliance security checklist and the appropriate devices/software to implement compliance. Also cover using and securing Blackberrys and netbooks.



· Great information!



· Very Good



· Very good and informative to the risk and solutions in insurance and advisor maket.



· Very good, Needed more time to address all questions. Thanks



· Very timely info and very key to my needs of secure devices.



· Too long of commercial at the beginning.



· Good overview of a complicated subject. I didn't realize how much we were missing



· Would not accept access code when called in by phone.



· It was great!



· How can I think of any improvement when I hear my name winning a new laptop?! Fantastic! Seriously, it was a great topic that I have very little knowledge in but concerns with. (Guessing many other advisors as well.)



· Good but too technical. Not sure how the USB drive works. Do you put all your data on it? Just your secure data? Isn't that then easier to lose? Was really looking for a way to secure my existing data. The Seagate drive seemed to be the only automatic option.



· Great overview of three relevant products. I appreciate that the presenters offered lots of info while sticking to their allotted times.



· Improvement: put slides on AP website, not just a bit.ly link



· Lots of great information.



· Would have given 5s had there been more advisor-centric security discussions, such as responsibilities and notification requirements after security breaches and/or lost/stolen equipment.



· This was a great one. Highly relevant. Thank you.



· It was great, even though a lot of it went over my head. I'm not a techy.



· This was a very useful and informative webinar. Safety of client information is a top concern and this gave me some good info for follow-up



· This webinar seemed to be for IT folks who serve our industry or for advisors that really enjoy diving into the tech stuff. It was for the average advisor as I hoped it would be.



· Volume of the first presenter was very low. Everyone else was fine.



· I did not know that there were so many options for encryption



· Keep it simple -without the long speeches.



· It was not interesting - very boring.



· Excellent information, very eye-opening. Nice touch with the giveaways.



· Great info, rapidly communicated. Good speakers. Nice to have several speakers to fill the time!

These webinars are constantly improving. Many thanks.



· It was very good, but honestly over my head. I am going to share the information with our IT Manager.




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Alliance Builder From Advisor Products Increases Referrals And Link Popularity On Advisor Websites



Using the Advisor Products BackOffice, financial advisors can now add a new type of page to their sites that’s preconfigured for exchanging links with allied professionals.



Alliance Builder is a great way for a financial advisor to build referral relationships with other professionals and also increases an advisory firm website’s “link popularity,” an important factor in boosting search engine rankings.



“Your site's ranking in Google search results is partly based on analysis of those sites that link to you,” according to Google’s guidelines for webmasters. “The quantity, quality, and relevance of links count towards your rating. The sites that link to you can provide context about the subject matter of your site, and can indicate its quality and popularity.”



Alliance Builder makes it easy to add an “Alliances” or “Partners” page to your site in minutes.



A lot of firms would probably want to exchange links with your firm, including:









































· Estate planners · CPAs
· Business valuation experts · Bankers
· Mortgage lenders · Geriatric care specialists
· Life insurance agents · Health benefit consultants
· Business consultants · Divorce lawyers
· Labor attorneys · Psychologists
· Elder care attorneys · Architects
· Contractors · Auto insurance brokers






Alliance Builder not only lists the names of companies and colleagues who refer business to you, but it also enables them to submit the information that they want posted on your site.



You simply email or call your referral sources with the URL for the “Alliances” page on your website.



Your alliance partners come to the “Alliances” page and can input their company’s name, a brief description of their firm, and their website URL.



You are notified by email whenever an alliance partner submits a request to create a link on your site’s Alliances page. You can edit the text they wrote, approve it as is, or reject it.



This makes it really easy for referral sources to be listed on your site.



While Advisor Products wants to make it easy for you to gain link popularity, some important caveats must be mentioned.



Just because you post a link to your colleague’s firm on your website’s Alliances page, doesn’t mean he or she will reciprocate. For you to gain link popularity, your alliance partner must follow through and link to your website.



Moreover, you don’t want to abuse a link exchange program by allowing just anyone to post a link on your site.



Like most search engine optimization techniques, link popularity is not as simple as exchanging links with just anyone on the Internet. In fact, Google, the dominant search engine on the Web, penalizes you if you engage in “link schemes” and you could actually hurt your search engine visibility by engaging in gimmickry.



“Some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites,” ,” according to Google’s guidelines for webmasters. “This is in violation of Google's webmaster guidelines and can negatively impact your site's ranking in search results.”



We’ve seen some advisors create link exchanges with other advisory firms and we do not want to encourage this.



While linking to other financial advisory firms—even if they’re a few hundred miles away and don’t compete with you—you may sound like a clever way to gain link popularity, excessive use of such a gimmick is bound to catch up with you. Such search engine optimization tricks have been around for years and eventually the search engines get wise to it.



Also, don’t think you can link to the local barber shop, dress designer, or auto mechanic and benefit from it. Google is smarter than that.



Instead of gimmickry, keep it real. Exchange links with referral sources and other professionals with which you do business or want to do business. Look for firms that have content on their sites that is related to what you do, even if it may not be directly related to your financial advisory practice.



For instance, a local builder may not seem to be directly related to a wealth manager like you. But builders know that people doing construction need loans and financial advice and they may be interested to add a page to their site about the personal financial aspects of constructing a new home or office building even if they do not link to any advisory firms now.



Please also keep in mind that search engine optimization is a complicated field. Search engine algorithms are complicated and take many factors into consideration in ranking your site and link popularity is just one them.



Advisor Products hosts websites for about 1,200 independent advisory firms and Alliance Builder is just our latest innovative feature. For more information about our services, go to www.advisorproducts.com or call us at (888) 274-5755.








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New Features In AdvisorVault 2.5 Increase Advisory Firm Productivity

Increasing productivity at independent financial advisory firms, Advisor Products Inc. today released AdvisorVault 2.5.



AdvisorVault is an online platform for secure communications between advisors and their clients. It can be added on to any advisory firm website.



The free upgrade streamlines routine tasks to promote client service and increase efficiency. New features include:



Track Client Activities. An advisory firm can track files downloaded by clients from the vault system. When a client reads a PDF portfolio report, for example, an entry is created in the log.



Collaboration. An advisor can add an accountant, attorney, or other outside professional to the vault and enable access to all of his clients’ vaults, a single client’s vault, a specific folder in a client’s vault, or a single file in a client’s vault.



Document Search. An advisor can search for a file or folder by full or partial name of the file. For instance, if you name all clients’ third-quarter portfolio reports “3Q09_AccountNumber,” you can search all of your firm’s client vaults for “3Q09” to retrieve a list of all the third-quarter 2009 portfolio reports.



Help Videos. Clients can access video help for using the vault. A series of one- and two-minute videos show clients how to drag and drop documents from their desktop to the vault, enable access for other professionals or family members, and view portfolio reports. (A separate series of videos is also available to advisors showing how to administer AdvisorVault.)



Incremental Portfolio Uploads. An advisory firm using Advent Axys® or Schwab PortfolioCenter® can upload only the most recent portfolio data without affecting previously uploaded reports. For example, you can upload holdings and transactions daily, but performance data only quarterly. This reduces the size of the upload and speeds up the process of batch uploading reports.



Email Templates. A firm can now create and store customized template emails that notify clients when portfolio reports and other documents become available in their vault. Template emails for routine tasks, such as posting a performance report, provisioning a vault for a new client, and changing vault passwords can be sent in bulk or one client at a time. Text for many routine tasks are already written for advisors to use and can be edited. Each template merges the client’s name into the salutation and includes your firm’s branding.



Disclosures. Advisors can upload a disclosure that will appear on the bottom of every page of every client’s vault.



Client-Vault Audits. An advisory firm can export a list of client accounts associated with vaults. This makes it easy for firms to audit whether they have properly mapped each client’s portfolio reports to the correct vault.



AdvisorVault 2.5 can be added to any website, whether or not it’s hosted by Advisor Products, for $1,000 a year or purchased with an Advisor Products Platinum website for $2,100 a year.



For additional information, please call our sales department at 888-274-5755.










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Advisors Can Now Post Articles On Advisors4Advisors

Empowering independent advisors to share ideas, Advisors4Advisors (A4A) today started allowing advisors to post links to articles, videos, and other online content.



The three news sections on the A4A home page
Market & Economy News, Industry News and Technology News—now accept advisor submissions.



To post news items, an advisor clicks on “Post An Article” and submits a headline, description, and link. The item must be approved by an editor before it is posted.



This is the latest integration on A4A of advisor-generated content. A4A recently enabled advisors to rate the industry’s practice management applications.



Advisors every day are adding new ratings and reviews of software applications for portfolio reporting, financial planning, and customer relationship management.



A4A also networks independent advisors who practice the same way. Advisors using the same three portfolio management, financial planning, and CRM applications they use in their practice are placed in groups.



In addition, A4A provides detailed reviews of dozens of advisor applications. All major vendors providing software to independent advisors have access to a site where they fill in matrixes detailing their specifications. The matrixes are displayed in the Review section of A4A and enable advisors to compare apps feature-by-feature, side-by-side. A4A is the first and only website to make this information easily accessible.



A4A has about 1,000 members and is in beta. Additional information and a 30-day trial membership are available at www.advisors4advisors.com. If you’re interested in becoming an A4A sponsor, please email admin@advisors4advisors.com.










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