Clients want advisers, not stock pickers

Most advisers are clueless about important tax rules that impact Individual Retirement Accounts and if they don't start becoming more savvy, they'll lose their customers, according to one IRA expert who spoke today. Ed Slott, a certified public accountant and editor of Ed Slott's IRA Advisor, a monthly newsletter based in Rockville Centre N.Y., spoke at InvestmentNews' Retirement Income Summit at the Grand Hyatt in New York. Advisers whose forte is identifying the top stocks need to shift their business to become experts in IRA rollovers and tax distribution details, he said. "The stock-picker model is dead. Consumers aren't looking for stock pickers," he said. "They're looking for true advisers. Ninety-nine percent of advisers are really financial salesmen. People want to move money to educated advisers." Mr. Slott's presentation was called "Capturing and Leveraging IRA Rollovers as Judgment Day Looms." He said that the best way for advisers to prove their worth is to show their clients that they can handle distributions of IRA money seamlessly. He also believes that advisers should be encouraging their clients to put money in Roth IRAs now if they meet those limits because taxes will rise in the future. "Taxes are on sale. I'm saying pay taxes now. It goes against the grain of all CPAs. They're all hard-wired to say, 'don't pay taxes before you have to.'" But Mr. Slott said that at "judgement day" when clients are withdrawing money, they'll be glad not to have to pay taxes, especially since he believes taxes in the future will rise. "You've got to keep on top of this now. It means paying a tax now, but you can buy it on sale. On judgement day, when clients need that money, wouldn't it be great to tell them it's all tax free." Mr. Slott said that advisers should begin helping their clients now prepare to convert to a Roth IRA in 2010 if their income is too high now to meet those limits.