I recently re-read a few chapters of a good introductory book on investing called “The Art of Investing & Portfolio Management.” I think one of the best chapters for individual investors to read is the chapter on what to look for when selecting a financial advisor. Here are the bullet points (I’ve given you some expanded excerpts on the first two as I feel these are of critical importance): 1) The Advisor Is a Registered Investment Advisor (RIA) “We strongly encourage you to work only with professionals who… are RIA’s. The reason: RIA’s have a legal fiduciary responsibility to provide their clients with the highest possible standard of care. As a fiduciary, an RIA is required by law to always look out for your best interests and to completely and objectively disclose all important information in his or her dealings with you. By contrast, a stockbroker is not legally required to always work in your best interest.” 2) The Advisor Uses a Fee-Based Compensation Structure “You’ll pay a fee-based advisor a percentage of your portfolio’s assets each year, as opposed to a commission on each transaction. As a result, a fee-based advisor’s interests are aligned with you own: The advisor does well only if your portfolio does well.” 3) The Advisor Is Consultative 4) The Advisor Incorporates Superior Capabilities at All Stages of the Process 5) The Advisor Is Someone with Whom You Feel Comfortable Working Note: I am an Investment Advisor Representative (IAR) of KMSFinancial Services, Inc., a federally Registered Investment Advisor(RIA).
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Assets in a Traditional IRA or 401(k) grow tax-deferred and distributions are taxable at ordinary income tax rates. A Roth IRA grows tax deferred and distributions are tax free. By converting your assets to a Roth IRA, you'll be paying your tax liability now - at a potentially lower rate-in exchange for tax-free growth and tax-free distributions in the future. If you make the conversion in 2010 you can spread the tax bill out equally over two years (your 2011 and 2012 tax returns). This special two-year provision is only available to conversions made in 2010. Unlike a traditional IRA, the government does not mandate you take required distributions from a Roth account. Therefore, you can let the entire account grow tax-deferred for as long as you wish. If you have enough wealth to be concerned about estate taxes, converting to a Roth may provide an additional benefit to you. There are other issues to consider before deciding if converting is right for you. A good place to start the conversation is to talk with your financial advisor. If you do not have an advisor or are thinking about hiring a new one, I’d love the opportunity to visit with you.