levine - Part 7

#FASuccess Ep 030: Self-Publishing A Book To Establish Your Authority (As A 401(k) Expert) with Josh Itzoe

July 25, 2017 07:01 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the thirtieth episode of the Financial Advisor Success podcast!

My guest on today's podcast is Josh Itzoe. Josh is a co-founder of Greenspring Wealth, an independent RIA based in Towson, Maryland, that advises on more than $2.2 billion in 401(k) plan assets.

What's unique about Josh's business, though, is not just the success that he's had in the 401(k) plan niche, but how he built his business: by making himself an expert by sitting down and reading the entire ERISA code himself, and then self-publishing a book to share his newfound expertise with prospective clients... which quickly established him as an authority brought him nearly $80,000 of new revenue within the first 6 months of publishing the book.

In this episode, Josh talks not only about what he went through to self-publish his book to jumpstart his 401(k) consulting business, but also discusses at length the business of being a financial advisor to 401(k) plans itself, how it differs from the traditional model of serving individual financial planning clients, the intensive RFP process it takes to win the business of mid-to-large-sized 401(k) plans, how the pricing model for advising on 401(k) plans is shifting from the AUM model to a flat-fee structure based on the size and complexity of the plan, and how including the stability of 401(k) plan consulting fees was able to smooth out the revenue volatility of the AUM fees in the other half of his advisory firm, which manages more than $400 million in AUM for individual wealth management clients.

We also talk more generally about trends in the 401(k) advisory space, why the real value to most employer retirement plans is not about helping them understand - or scaring them about - their fiduciary duties as plan trustees, but simply helping them avoid the administrative and operational mistakes that really get most plan sponsors in trouble, and why in today's environment it's difficult to break into the 401(k) plan space as a financial advisor… unless you're ready to dedicate your full time to it.

And be certain to listen to the end, where Josh talks about why he thinks the future of serving 401(k) plans better is all about leveraging new technology solutions, and offers up some great resources for those who want to get more active in this space (which you can find in our Show Notes for this episode).

So whether you’ve been thinking about getting into the 401(k) business as a financial advisor, or are simply curious to hear how writing and self-publishing (with a little outsourcing support) your own book can accelerate your marketing efforts and establish you as an expert in your niche, I hope you enjoy this latest episode of the Financial Advisor Success podcast!

Congress Approves (Mostly Permanent) 2015 Tax Extenders Legislation For QCDs And More!

December 16, 2015 11:15 am 19 Comments CATEGORY: Taxes

Late last night, the House Ways and Means committee came to an agreement for key legislation to renew the so-called “Tax Extenders”, a series of tax provisions that have lapsed and been reinstated (i.e., “extended”) repeatedly over the past decade. The new legislation, entitled the Protecting Americans from Tax Hikes (PATH) Act of 2015, will once again retroactively reinstate for 2015 the tax extenders that were renewed for and then expired at the end of 2014.

Unlike past tax extenders legislation, though, this time many of the provisions are permanently renewed. From the popular qualified charitable distribution (QCD) rules for making charitable contributions from an IRA for those over age 70 ½, to the American Opportunity Tax Credit for college, and the deduction for state and local sales taxes, this will be the last time that these key tax planning provisions remain in an end-of-year limbo!

However, not all tax extenders provisions were made permanent; a few, such as 50% bonus depreciation for businesses and the work opportunity tax credit, are only extended a few years. The legislation also includes a few new “tweaks”, from a slight expansion of how qualified distributions from section 529 plans can be used, to the elimination of in-state-plan requirement for the coming new 529-ABLE plans for disabled beneficiaries.

Although the PATH legislation has not quite passed yet – it still needs to be Omnibus Appropriations legislation that sets the government’s budget through September 30 of 2016 – the tax extenders expected to pass in its agreed-upon form in a matter of days, once the remainder of the rulemaking process is completed.

And notably, the final version of the Omnibus legislation will not include any changes to the Department of Labor’s fiduciary proposal, which remains intact and on track for the DoL to issue its final year in the coming months!

Weekend Reading for Financial Planners (Sep 12-13)

September 11, 2015 02:22 pm 19 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest industry data showing that mergers and acquisitions of financial advisory firms is running at a record pace for 2015, both in terms of the number and the size of advisory firms. Also in the news this week was an interesting new study showing that the bulk of current ETF growth is being driven by independent RIAs, especially firms with over $500M of AUM, that have collectively added half a trillion dollars to ETFs in just the last 12 months!

From there, we have a few practice management articles, particularly focused around the 'necessary' topic of compliance, from a look at the kinds of 'boilerplate' provisions that really are important to include in an advisory agreement with clients, to a discussion of the recent Notice of Proposed Rulemaking from the Treasury's FinCEN division that may require SEC-registered investment advisers to adopt Anti-Money Laundering (AML) compliance rules, to a look at a large RIA that recently received a huge fine from the SEC not because it had significant compliance breaches that harmed clients but because the firm failed to engage in their internal compliance oversight processes necessary to know that employees were acting properly (in other words, it's not enough to be compliant, you need a process to demonstrate that you've confirmed you're being compliant!).

We also have a couple of technical planning articles this week, including: a look at Qualified Longevity Annuity Contracts (QLACs) that were heralded last year as a savior for retirees but thus far have seen very little adoption; recent new research from Wade Pfau, finding that given the impact of investment costs and overpriced stock and bond markets the "safe" withdrawal rate might be under 2%(!); a good article about the key differences between Designated Roth Accounts (the Roth version of an employer retirement plan) and a Roth IRA; and a discussion of the research of Dr. Brigitte Madrian, whose research 15 years ago on the power of automatic enrollment of employer retirement plans indirectly spawned the explosion of the target-date fund industry.

We wrap up with three interesting articles: the first raises the question of whether it even makes sense for financial advisors to retire at all, given how rewarding financial planning is both emotionally (given the deep client relationships) and financially (where it often pays more to keep an advisory firm for several years rather than sell it); the second article looks at the rollout of a new post-CFP designation, called the "Certified Financial Transitionist", originally designed to help train advisors to work with clients who experience "Sudden Money" events, but arguably relevant for virtually any/all advisors (after all, doesn't virtually every client come to us because they need help with some kind of transition!?); and the last raises the question of whether it's finally time for financial planning to shift from an industry where "best practices" are often based on little more than a combined of tradition, intuition, and the school of hard knocks, to a profession where true best practices are established via thorough research and the application of the scientific method to cultivate an "evidence-based" approach to effective financial planning.

And be certain to check out the latest Bill Winterberg video at the end - the latest segment of his FPPad Tech Tour video series for 2015, featuring an interview with yours-truly where Bill reveals, for the first time ever on video, how many blue shirts are actually hanging in my closet!

Enjoy the reading!

How To Do A Backdoor Roth IRA (Safely) And Avoid The IRA Aggregation Rule And Step Transaction Doctrine

August 12, 2015 07:01 am 92 Comments CATEGORY: Taxes

Since the income limits on Roth conversions were removed in 2010, higher-income individuals who are not eligible to make a Roth IRA contribution have been able to make an indirect “backdoor Roth contribution” instead, by simply contributing to a non-deductible IRA (which can always be done regardless of income) and converting it shortly thereafter.

However, in practice the IRA aggregation rule often limits the effectiveness of the strategy, because the presence of other pre-tax IRAs and the application of the “pro-rata” rule limits the ability to convert just a new non-deductible IRA. On the other hand, those with a 401(k) plan that allows funds to be rolled in to the plan can avoid the aggregation rule by siphoning off their pre-tax funds into a 401(k) plan, and then converting the now-just-after-tax IRA remainder.

Perhaps the greatest caveat to the backdoor Roth contribution strategy, though, is the so-called “step transaction doctrine”, which allows the Tax Court to recognize that even if the individual contribution-and-conversion steps are legal, doing them all together in an integrated transaction is still an impermissible Roth contribution for high-income individuals to which the 6% excess contribution penalty tax may apply. Fortunately, though, the step transaction doctrine can be navigated, by allowing time to pass between the contribution and subsequent conversion (although there is some debate about just how much time must pass!). But perhaps the easiest way to avoid the step transaction doctrine is also the simplest – if the goal is to demonstrate to the IRS and the Tax Court that there was not a deliberate intent to avoid the Roth IRA contribution limits, stop calling it a backdoor Roth contribution in the first place!