Roth IRAs have many benefits but are not right for everyone, and the decision to convert can be complicated. Being prepared to discuss clients’ questions will help strengthen relationships.
Take a holistic look at the total assets your clients have in their taxable accounts and all of the assets in their Traditional IRAs.
This is also an opportunity to ask clients if they have accounts in other locations that need to be consolidated for the overall Roth IRA conversion opportunity.
To evaluate the most appropriate clients for a Roth IRA conversion, review the Roth Potential Ratio grid below:
|Assets Available in Taxable Accounts||Assets in Traditional IRAs||“Roth Potential Ratio”||Potential for Conversion to a Roth IRA|
The decision to convert will be based on your clients’ access to outside funds in taxable accounts to pay the taxes owed on the conversion. One way to evaluate the appropriateness of a Roth IRA conversion is to look at the ratio between the taxable assets that could be used to pay conversion taxes and the value of all Traditional IRAs for a client.
Then create a written assessment using the Client Profile Sheet and call your top priority clients to set up appointments.
Learn more about the pros and cons of Roth IRA conversions, including the rules shaping this year’s opportunity.
Continue the conversation from your first client meeting with an expanded discussion about retirement planning.
Even if your client does not convert to a Roth IRA, use this opportunity to have a broader discussion about potential gaps in their retirement plan. The discussion can include topics such as risk tolerance, portfolio rebalancing, current financial status and obligations, as well as overall estate planning objectives.
A key source of new clients is other professional referrals.
Typically, professionals across the spectrum can work together to cross-refer clients. In addition, when building a retirement business, also look for other resources, such as health care advocates, independent living coordinators and life coaches.