I refuse to compete on what is has lowest cost, that is a loser’s battle. [/quote]



Yeah, you’re worth more than the $2000/yr to the grid that you’re getting paid for on this one, and you know it… How do you help her see that?



I’m sure that I’ll be dealing w/ this is a couple of years myself. I’d love to know the outcome.

[quote=anonymous]

Am I legally prohibited to do so?

I don’t know your business setup, but the answer is probably “yes”.

401(k) conversations are never documented.  401(k) recommendations are never in writing. 

401(k) conversations are never documented. 401(k) recommendations are never in writing.

[quote=anonymous]

What value are you giving her?

Are you illegally giving her investment advice on her 401(k)?

My clients always move their 401(k) money to me. More to the point, it always gets done before we talk about specific investments or fees. How do I do this? I talk about all of the advantages of an IRA and a Roth IRA over a 401(k). If they understand this, you can get them to rollover the money to a money market account inside of the IRA with the promise to talk specific investments once the money is transferred. Can you put together a long list of reasons why she would be better off in an IRA/Roth IRA instead of a 401(k)?

[quote=Ashland] [quote=anonymous] Ashland, are you legally allowed to give recommendations on her 401(k)?[/quote]

Am I legally prohibited to do so?[/quote]

Yes. Unless you have a series 66/65 and are affiliated with a RIA you are just a broker representative and are not allowed to give financial planning advice that isn't associated with an investment that you are offering.   Counseling someone on how to allocate their 401K when you are not the rep is not legal.

Read my post again.  I gave you great advice.  They client has to see the benefit to moving the money.  All that you need to do is get them to see the advantages of an IRA/Roth IRA over the 401(k).  

The fact that she is a current client is what makes this so easy.  If she wasn't a current client, you would have to get her to understand the reasons for working with you and you might have to talk more specifically about investments. 

[quote=Dust Bunny]

[quote=Ashland] [quote=anonymous] Ashland, are you legally allowed to give recommendations on her 401(k)?[/quote] Am I legally prohibited to do so?[/quote]

Yes. Unless you have a series 66/65 and are affiliated with a RIA you are just a broker representative and are not allowed to give financial planning advice that isn’t associated with an investment that you are offering. Counseling someone on how to allocate their 401K when you are not the rep is not legal.

Dust Bunny, having a 65/66 and being affilliated with an RIA still isn’t good enough to give investment advice.  One must still have an advisory agreement with the client.  Additionally, when it comes to qualified plans, there are additional regulations, and quite frankly, I have no idea what is legit or not.

Thats true, I thought that was understood with the RIA business model.  The client has to be an advisory client before you can give them advice on a 401K that you aren't the actual rep on. 

I guess, I don't understand what the question that Bankrep was asking in the first place.

Dust Bunny, having a 65/66 and being affilliated with an RIA still isn’t good enough to give investment advice. One must still have an advisory agreement with the client. Additionally, when it comes to qualified plans, there are additional regulations, and quite frankly, I have no idea what is legit or not.

============

Yeah, you’re right. I’m a Investment Advisor Representative, but I don’t represent the firm who has fiduciary responsibility for the plan.



However, when I do an aggregated asset allocation plan I find it very hard to miss 50%+ of client’s financial assets.



This is a risk I choose to take.

[quote=Ashland] [quote=anonymous] Dust Bunny, having a 65/66 and being affilliated with an RIA still isn't good enough to give investment advice.  One must still have an advisory agreement with the client.  Additionally, when it comes to qualified plans, there are additional regulations, and quite frankly, I have no idea what is legit or not.[/quote]
============
Yeah, you're right. I'm a Investment Advisor Representative, but I don't represent the firm who has fiduciary responsibility for the plan.

However, when I do an aggregated asset allocation plan I find it very hard to miss 50%+ of client's financial assets.

This is a risk I choose to take.[/quote]

There is nothing against putting the 401K assets in an overall report.  You just can't give any advice on the positioning of those assets.

I know....it's a very fine line and clients don't understand why you can't tell them what to do with their 401K when you are already giving them advice on the assets you have under management.

So do you dust bunny tell them you can’t help them with that portion of their assets?

Ashland, if you put it in writing, it is a stupid risk because it is one that can cost you your career.

[quote=bankrep1]So do you dust bunny tell them you can't help them with that portion of their assets?[/quote]

Pretty much.

I tell them that because those funds are in a 401K and may be different from fund outside the 401K or are proprietary funds I don't have enough information to be able to advise them on the individual funds.   Also I am not the representative on that plan so I am not supposed to do so......HOWEVER, I do go over a total asset allocation plan for them (% international, % domestic, large cap, small cap, bonds, reits etc) discuss where they are allocated with me and elsewhere and try to suggest/guess what allocations they have in the 401K.  Most of them get the idea without me telling them take X fund in the 401K and change it to XX fund in the 401K.

It has never been a problem.  Since I don't have my IAR status yet, I can only broadly hint.   Later I will be able to have them sign an advisory agreement and then be able to give information...legally instead of trying to do backdoor advice.

Its a stupid rule.

Specific advice on 401K plans gets into ERISA laws. I would NEVER put 401K recommendations in writing.  Now, if you want to verbally tell the client...

Jones used to be big on telling IRs to give clients advice on their 401Ks as a way to talk to prospects, I would use PORTFOLIO (the Jones software) to actually lay out my recommendations.  It wasn't until I joined LPL that I learned that we (as financial advisors) are not able to do anything like that without opening up some serious liability possibilities.

Supposedly, the Pension Protection Act will allow you to become a legal plan fiduciary, which will allow you to give specific 401K advice. It's just not clear yet how or what being a plan "fiduciary" means, or how you get that designation.

[quote=anonymous]

Read my post again.  I gave you great advice.  They client has to see the benefit to moving the money.  All that you need to do is get them to see the advantages of an IRA/Roth IRA over the 401(k).  

The fact that she is a current client is what makes this so easy.  If she wasn't a current client, you would have to get her to understand the reasons for working with you and you might have to talk more specifically about investments. 

There’s lots of them, but high up on my list is the subject of some of this thread.  When the money is in a 401(k), the client is getting no advice from the broker making money on the plan and his personal advisor (you) are unable to give him advice.  Therefore, it makes sense to roll over the money even if no investment changes will be made. 

bankrep1,

What are you trying to do?  I thought you were trying to get her to bring her 401k assets to you into the wrap account at 1.25%.

What is the client "debating"?  Are they debating whether to do the rollover in the first place, or are you competing against another advisor?

Until you are clear in what your situation is, you will continue to get unclear answers.

Selling is EMOTIONAL.  I have YET to have clients sign a SWITCH letter saying that the reasons for the change were more "logical" as their primary reason for changing investments.  (There must be logic to back it up, but it IS more emotional.)

You MUST have the client's emotional buy-in.  Until you do, you are competing on price, and the client's past experience with you.  If those are not the driving factors, and you don't have a bonded relationship with the client, you will (most likely) not get the deal.

You must know what you bring to the table.  But you must also know what makes your client's tick.  When there's a match, that's when you'll get the deal.

[quote=bankrep1] [quote=Bobby Hull]

[quote=bankrep1]Just curious how everyone else handles a clients 401K. Say for example they have 200K liquid and 500K in their 401K. How do you personally handle this situation?[/quote]

You raise $2,000,000 per month and you even have to ask this question? You are a liar and I eagerly await your silly explanation.

[/quote]

Bobby I do and I know you're jealous. I get frustrated when I have given out free advice and was wondering how others approach this subject. The specific event that led me to ask this question is I have a client who has about 200K with me, she retired and has a 500K 401K for which I have given her advice on for the last couple of years. I asked for the rollover and she is "debating", had I not given her advice she wouldn't of performed that well and would be handing me the rollover. Her thing is the 401K has done very well and there are no fees. . . Her other investments are in a wrap 1.25%[/quote]

Someone else is talking to her about rolling her 401k and he's looking better than you are. Selfishly, she's probably considering a guaranteed variable annuity, as opposed to something that guarantees YOU 1.25%/year. More than likely, she's already moved it and doesn't want to hurt the feelings of "that boy at the bank."