Financial Advisors

How would you reply to someone who says they are going to roll their 401k to their new employer, after you’ve offered to review their options for those funds? I feel like people just blindly do things

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Sometimes Advisors blindly rollover the funds into a managed account/IRA. Rolling over funds from one 401k to their new 401k could actually be in their best interest. It’s worth a few minutes to examine the pros/cons of each rollover option as their decision could have long-lasting effects or consequences. Always approach this situation with a consultative approach rather than simply drilling that they would be better rolling the funds directly over to an advisor. List out the pro’s and con’s for each and allow them to decide.

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There are a few reasons why rolling to a new employers 401(k) might make sense. Particularly if they may need liquidity if they separate from service after age 55 or a guaranteed fixed account with high rates. Also, sometimes this can make sense if your doing back door Roths to avoid the pro rats rule.

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Sometimes you can’t fix stupid 🙅🏼‍♂️

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😬😂

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FA2 that’s all true and I agree....but the second I see an employee really be harmed by self managing their 401k, it’s time to sell my advice. No 401k will ever provide the level of service and hand holding in bad times that we provide our clients.

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Not challenging your level of handholding/service model, after all, I am an Advisor as well and believe that my service model is excellent. Not everyone needs or wants to pay for that service model and I’m ok with that. The harm you’re referring to is likely making a bad move (sell low, buy high) at the wrong time. If you have them as a client (charge a financial planning fee if you’re able and it doesn’t matter where the accounts are held because they’re paying for your advice not necessarily your company’s product if that makes sense...?), you’ll be able to help guide/advise them though those periods of time. I believe ‘our’ (FA’s and FP’s) advice has a tremendous amount of value, positioning that advice is crucial to help clients get out of their own way sometimes. Sometimes the client doesnt think they need to buy advice is all I’m saying. That’s where you can look at the new 401k plan, check the provisions the new company has adopted and go from there is the client is hell bent on the rollover into the new plan. "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." Winston S. Churchill "A wise man will make more opportunities than he finds." Francis Bacon

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Usually I would ask how much advisement really do their plan sponsor offer. Do they hold something like a financial empowerment workshop individually or with the employees every so often? Sell the services working with an financial advisor could provide. Tailored portfolio, ongoing monitoring, one on one relationship, etc.

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Thank you! This is helpful. Unfortunately, I have not gotten a response from him so I’m gonna move on 🤷🏽‍♂️

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Konvenience is King

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Sadly true

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Limited options in the 401(k) where you can choose the investments in the IRA. If any money is post tax, move it to the Roth and start the clock

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I can think of one situation when it’s better to roll Into the new 401k..... when the new 401(k) is managed by you and the IRA they would be considering is with their current advisor!!

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Exactly - look at the new 401k and BOR it if possibly.

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