Pershing
Leverage Pershing's New Roth Conversion Calculator to Enhance Client Relationships
Issue 12, 2010
This year marked the first time many of your high-income clients can diversify their retirement savings by converting to a Roth IRA. Now that Roth IRAs are available to most everyone, the question is where should you begin?
Here are four steps to get started:
- Familiarize yourself with Pershing’s powerful new Roth IRA Conversion Calculator—Go to the Retirement Center under Tools in NetX360™ to access the Roth Conversion and other enhanced retirement calculators
- Learn more about the Roth opportunity Read Pershing’s new Roth IRA Conversion Opportunity guidebook, which is available in the Material Catalog under Resources in NetX360 or by e-mailing marketing@pershing.com. You can also access a Roth IRA Conversion webcast in the Retirement Products Suite.
- Segment your client base—Decide which clients to contact first based on their ability to pay taxes on the conversion
- Make proactive calls to your clients—Schedule a Roth IRA conversion analysis using the Roth IRA Conversion Calculator
Segmenting Your Client Base
There are many long-term tax benefits of converting to a Roth IRA—especially for clients who want to leave IRA assets to their heirs. However, the core of any Roth conversion is a client’s comfort with paying taxes for the year of the conversion (although those who convert in 2010 can split the conversion income in half for 2011 and 2012).
While you will want to discuss the Roth IRA conversion opportunity with all of your clients at some point, approaching your clients based on their available assets to manage the tax liability can help you prioritize the contact process.
Next, select your clients who may benefit most from a Roth Conversion. To do this, you will want to take a holistic look at the total assets 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 other accounts in other locations that need to be considered for the overall Roth conversion assessment.
Assign a “Roth Potential Ratio” to each client, and prioritize based on those most likely to benefit from a conversion and have the ability to pay the corresponding tax liability. The table below provides a general example of developing the Roth Potential Ratio and where there is potential for completing a Roth conversion.
| Assets in available taxable accounts | Assets in Traditional IRAs | “Roth Potential Ratio” | Potential for conversion to a Roth IRA |
|---|---|---|---|
| $50,000 | $100,000 | 0.5:1 | Most unlikely |
| $100,000 | $100,000 | 1:1 | Less likely |
| $500,000 | $100,000 | 5:1 | Moderately likely |
| $1,000,000 | $100,000 | 10:1 | More likely |
Roth Conversion Discussions May Lead to New Business
As you begin year-end tax preparations with your clients, you can expand your conversations to include Roth conversions. Use the Roth Conversion Calculator to run a few “generic” scenarios that you can use to illustrate the pros and cons of doing a Roth conversion. From here, you will be able to discuss larger retirement savings planning and tax considerations with each client. These conversations should lead to increased business opportunities, including:
- More rollovers from qualified plans
- Transfers and consolidation of other assets
- Referrals from your current clients
Accessing Roth IRA Conversion and Retirement Tools on NetX360
The Roth IRA Conversion Calculator and other enhanced retirement tools can be found in the Retirement Center under the tools tab. Also visit Retirement Solutions in Resources throughout the first quarter for turnkey marketing support.
For Professional Use Only.
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