You’ve Got to Know When to Roll ’Em, Know When to Hold ’Em’

 In Retirement Planning & Wealth Management

You’re prepared for a rollover conversation when you meet potential clients Beth and Bob. With 401(k)s worth $500,000 each, a substantial joint savings account and a healthy sized Roth IRA, there may be benefits to moving assets for all involved. Now 56, both Beth and Bob have accumulated and preserved their assets and are ready to make financial decisions regarding their futures. While Bob plans to work another 10 years, Beth plans on retiring this year to visit her daughter more often at college, and they plan on contributing as much as possible to her tuition. There’s also the question of Beth’s aging parents – she would like to contribute assets to their long-term health care.

It’s a familiar conversation. Beth and Bob ask tough but fair questions on what to do. But they know your expertise comes at a price, and must have justification for the fees that come along with your support.

Regardless of fiduciary legislation, there’s no ignoring that the standard for financial professionals has been elevated. Advisors must continue to nurture confidence among existing clients while building a foundation of trust with new ones.

Human nature indicates that when faced with an easy route or a more challenging one, inertia inevitably prevails. For Beth and Bob, the rollover – along with the inconvenience of change, and the associated fees – must be warranted. And knowing when that decision is not in your clients’ best interest is also critical to developing their trust in your value proposition.

For Beth and Bob, learning which portions of their investments would potentially benefit from a rollover and which portions of their investments to leave where they are is critical. For example, continuing to hold certain investments benefiting from low fees may make sense in the short term, and rolling over others to build some growth may be the right decision given Beth’s relatively young retirement age. They may resolve to dip into their Roth IRA to use their contributions for their daughter’s education expenses without suffering a premature distribution penalty. Retiring above age 55, Beth can also start accessing her 401(k) for some of those travel and health care expenses.

Potential clients reach out when something is missing from their situation, whether that is a human touch or just admitting they can’t do it all on their own. A commitment to a fiduciary standard means connecting with your clients by not just saying, but showing you have their best interests at heart during complex decision-making. In the end, it’s about providing clients with the peace of mind that they’ve selected an investment partnership focused on their long-term financial success.

For more on navigating rollover conversations, explore our Million Dollar Rollover training opportunities.

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Be sure to consider all available options and the applicable tax consequences, fees and features of each option (stay with your former employer plan, roll over to a new employer plan, roll over to an IRA or cash out) before moving your retirement assets.