The use of proffesional 72 services…has anyone

L1: The use of proffesional 72 services…has anyoneused a company on the interent called smartrollover.com?It is a group of 5 or 6 cpa”s who work out of the Raymond James Financial firm.They dealmainly with clients who want to maximize their 72t distributions while maintaining thier IRA account at its highest possible level.If you are familiar and have used this company,please tell me if your satisfied .Thank you..2004-12-13 22:04, By: singer/songwriter, IP: [68.33.193.197]
L2: The use of proffesional 72 services…has anyoneDear Singer / Songwriter:
I looked through the web site and couldn’t find any reference to the 5 or 6 CPAs you mentioned. What I found is a very informative web site which is designed to draw business to the Raymond James rep in Tennessee who owns the site. If you will read the ‘Disclaimer’ at the bottom of the home page you will learn the relationship of the rep and Raymond James, and the fact they are not CPAs and suggest that you talk with your own accountant. On the other hand it gives me some good ideas for the site I’m building for use with my financial planning practice.
The bottom line is you must decide whether you can do all of the work involving your retirement accounts by yourself, or if your need professional help with the challenge. Studies have shown that about 10% of the population can truly DIY and 80% need or want someone else to take care of the details and are willing to pay for this service. If you need help, check with the planners in your area to find one you feel is best to work with, and it may be the one at this web site.
Good luck.
Jim2004-12-16 09:51, By: Jim, IP: [68.1.157.228]

L2: The use of proffesional 72 services…has anyoneI would like to chime in on this issue, not because I do this type of work; but rather because there are some inherent problems that present themselves when relying upon an investment advisor / brokerage / trustee for 72(t) planning / computations. They are:
(1) 90% or more of the work involved in creating a successful 72(t) plan is in the planning; not in the computations (those take 30 seconds) and not in the execution. Very, very few investment advisors are sufficiently skilled to do comprehensive & detailed planning in this department. This not to take anything away from investment advisors; rather, their skills do and should lie elsewhere.
(2) The investment advisor is invariably linked directly or indirectly to a brokerage / clearing house / trustee whose interests are not the same as yours and are sometimes adverse. Without naming names; there are several institutions out there who have set internal۝ rules regarding SEPP plans that are more restrictive than what the IRS permits. What if you want to avail yourself of one of those features? How would you know about it? The trustee is not going to tell you!
(3) Everyone on the planet makes mistakes; including investment advisors. If an investment advisor does make a mistake on your SEPP plan resulting in penalties and interest; you would expect to be re-imbursed by the investment advisor think again. Investment advisors are NOT licensed nor insured to perform this type of work. Instead, one should see a CPA or tax attorney and receive a written opinion letter. This puts the CPA or tax attorney on the hook۝ and liable for his or her opinion which you can justifiably rely upon. Further if he is somehow wrong, professional liability insurance will pay all of your damages.
(4) Lastly, one would pay a CPA/Tax attorney once and only once for SEPP plan development and opinion. Conversely, one is going to pay an investment advisor potentially forever. It woudl seem to nme that if I am going to pay that investment advisor lots of money over the years, I want to do so for his or her promary skills; e.g. making my assets grow; not for his tax advise.
TheBadger
wjstecker@wispertel.net2004-12-16 11:09, By: TheBadger, IP: [66.250.23.21]

L2: The use of proffesional 72 services…has anyoneGood afternoon, Badger. Thanks for your comments about CPA vs Planner duties, and I would like to add or clarify some items in my comments and address some of your points. 72(t) is a mixed bag of both tax planning and investment planning.
(1) The CPAs job is to add up the assets that will constitute ‘The SEPP Plan’ and do the calculations to determine how much should be withdrawn each year to maintain compliance. This could be a one-time activity if the calculated amount never changes, for which a single fee is charged, or could entail several re-calculations for unforseen events during the time of the SEPP life which require new calculations, which would incur a new fee. Unless the CPA provides investment advice as part of this service, which could either be a one-time or ongoing fee arrangement, the second step is to employ a financial planner to establish the investment plan.
(2) The financial planner’s mission is to determine risk tolerance of the client, and to create an appropriate investment mix to provide the needed income to meet the SEPP distributions calculated by the CPA. This investment mix would probably include a whole host of assets, such as individual stocks, bonds, CDs, mutual funds of different types, REITs, LPs, and so forth. Unlike the task of calculating the amount of required distribution, monitoring the investment mix and making changes is an ongoing mission. Values and income generated from each of these asset classes changes constantly. In the mid to late 90’s you could simply sell fewer and fewer shares of a growth mutual fund to get the same dollars each month for distributions. But after March of 2000, it took many more shares to do the same job. If you didn’t make changes … well, I don’t think I have to detail this nightmare.
(3) Like I stated in my first post, 10% of the people don’t need any help whether it’s from a CPA or financial planner, but 80% do. And it’s this 80% that need the services of a CPA for the SEPP setup / calculations, and a financial planner for the investment portion. And both the CPA and the financial planner (remember this could be one person) should be fairly compensated for the services each renders whether it’s a one-time event or an ongoing relationship.
One final thought. Both the CPA and the financial planner should have a good working knowledge of each discipline, regardless of each’s desire to perform the other function. A CPA is authorized by the Investment Advisors Act of 1940 to function as a financial planner. However, a financial planner would have to be a CPA and / or tax attorney to function in these roles.
Jim2004-12-16 15:18, By: Jim, IP: [68.1.157.228]

L2: The use of proffesional 72 services…has anyoneA CPA is authorized by the Investment Advisors Act of 1940 to function as a financial planner.
===========================================================
Jim: I would be most appreciative if you could furnishthe citation for this rule.
Peace,
Joel2004-12-16 19:28, By: Joel, IP: [67.80.22.51]

L2: The use of proffesional 72 services…has anyoneHello Jim;
You are 100% correct. However, as a personal bias, and it is personal, we simply disagree on one point: that the CPA and investment advisor can be the same person.
My personal conviction is that these should be different people for several reasons:
1. These disciplines are certainty related; with some liberty, akin to the similarities and differences of architect & engineer or even brain surgeon & family practicioner. That being said, none of us would ever hire the engineer to do the architect’s job or vice versa. Instead wouldn’t we hire both, each at the right time. Further, the bodies of knowledge have become too vast & complex, not to mention the price the professional pays to stay current. Another way to say it I suppose is that one can be a jack of (all) many trades or a king of one. I find the later as the better approach.
2. I see and have experienced what I call the inherent conflict of interest between tax planning and inventment counseling. I know I could consciously avoid this conflict; but what about sub-consciously? Therefore, more as a personal / moral imperative, I simply choose to avoid the issue.
TheBadger
wjstecker@wispertel.net
2004-12-16 19:41, By: TheBadger, IP: [66.250.23.21]

L2: The use of proffesional 72 services…has anyoneGood morning Joel & Bill. Let me respond to each of you, Joel first.
The Investment Advisors Act of 1940 requires registration as an Investment Advisor anyone who ‘holds himself out’ as an Investment Advisor or Financial Planner. Unfortunately too many people are representing themselves as ‘Financial Planners’ but haven’t complied with the law and established their Registered Investment Advisor (RIA) status, either personally or corporately. Earning the designation ‘Certified Financial Planner or CFP(tm) doesn’t relieve someone from the requirements of the 1940 Act. There are some exceptions to the registration requirement, and CPAs are one of those exceptions. I’m sorry but I can’t give the cite for this as it’s a ‘fact’ that I learned when training for my position. I am an Investment Advisor Representative of a corporate Registered Investment Advisor firm (how about that long, hairy name). It would probably be more accurate for me to say that CPAs are excluded from the requirement to establish an RIA in order to hold themselves out as financial planners.
Bill. I agree with you 100% that CPAs and Financial Planners should be separate people. My only point was that both positons ‘could’ be the same person. Ideally a CPA firm and a Financial Planning firm should work together but be separate because each job is radically different. Let me give an example from my previous life as a Navigator in the USAF flying KC/RC/EC-135s, all of which are ‘crew’ aircraft as opposed to ‘single-seat pilot’ aircraft. In a ‘crew’ aircraft, each person brings their specialty (Pilot, Co-pilot, Navigator, Boom Operator) to the mission, and each performs their job. The Navigator tells the pilot where to go (I like that part), but I didn’t get to make takeoffs and landings. In the ‘single-seat pilot’ situation, one person does everything with no opportunity for cross-check like you have in the crew situation. The worst pilots I ever flew with were former fighter pilots who wanted to do everything by themselves. My flying analysis is to support our position that CPAs and Financial Planners should be separate. So I would say we are on the same page … with one exception.
While it’s true that someone may pay a CPA once for setting up a SEPP, and they may pay a Financial Planner ‘on-going fees’ that can last a long time, I don’tfeel that one situation is ‘bad’ and the other is ‘good.’ My feeling is that someone should be willing to pay for the services needed and used. If a CPA prepares an individual’s taxes every year, then that CPA earns a fee each year. If a client needs my services to build a financial plan and then never sees me again, then I collect a commission or fee for my services. (No, commission is not a bad word contrary to what the media would like you to think. It’s just one way for compensating someone for their services.) But if the client requires on-going services for monitoring their accounts and recommending changes as investments change, then I amfully justifiedto collectfor my services. In this case the CPA and I are the same when it comes to how we are compensated for our services. And many studies have shown that 80% of the population fit into this category of needing and wanting our services, while 10% are completely capable of truly doing it without our help and should not seek our services. (Please go to the internet and search for these studies if you want references.) The other 10% you ask? These folks don’t know what they are doing but are not willing to pay someone for the services they desperately need. Neither of us can help them.
Jim2004-12-17 09:40, By: Jim, IP: [68.1.157.228]

L2: The use of proffesional 72 services…has anyoneHello Jim:
We are on the same page. Just to clarify (not between you and me) but for other readers; there are really three functions to be performed here which may be 1, 2 or 3 people as follows:
1. Financial planning and within the context of our original discussion means the design of the SEPP plan within the context of the client’s overall financial picture. This function should most often be performed by a CPA (but could be done by a CFP or RIA).
2. Documentation and opining on the SEPP plan. This function, in my opinion, must be done by either a CPA or tax attorney.
3. Advice regarding the investing of the IRA corpus to meet the needs of the SEPP plan as well as overall growth of the account. This function is best performed by an RIA.
You rightfully point out that all three functions could be performed by one person. On the other hand, I have simply taken the personal postion that I am willing to combine functions 1 and 2; but I won’t combine 1/2 with 3.
TheBadger
wjstecker@wispertel.net
2004-12-17 10:01, By: TheBadger, IP: [66.250.23.21]

L2: The use of proffesional 72 services…has anyoneBill:
Yes sir. We are in full agreement for the best way to work the puzzle.
Jim2004-12-17 10:07, By: Jim, IP: [68.1.157.228]

L2: The use of proffesional 72 services…has anyoneIf a client needs my services to build a financial plan and then never sees me again, then I collect a commission or fee for my services. (No, commission is not a bad word contrary to what the media would like you to think. It’s just one way for compensating someone for their services.)
==========================================================
Jim,
An agent can serve but one master. In my view a fiduciary never gets paid by a third party.If one retains an “advisor” (RIA) to build a financial plan and pays the “advisor” via the purchase of loaded funds that the “advisor” “recommends” then I do not consider such a relationship as betweenan advisor and client but rather as between a salesperson and a customer.Such built in conflicts of interests work to the great advantage of the salesperson at the expense of the individual.
Peace and Hope,
Joel L. Frank2004-12-22 08:20, By: Joel, IP: [67.80.22.51]

L2: The use of proffesional 72 services…has anyoneGood afternoon Joel, and thank you for yor comments about the ‘conflict of interest’ problem. The one sentence you highlighted really could have been longer and more detailed in my post, but I had already gone on long enough.
When does an advisor become a rep (salesman), and when does a rep become an advisor? If you think it’s tough for the client to figure out, try to see it from the advisor / rep viewpoint. The line is so fine that in reality you can’t separate the two, and it really drives us nuts! Each case is so unique and the necessity to recommend the ‘right investment’ so great that the industry is turning to ‘wearing two hats’ (advisor and rep) so as not to violate someone else’s rules and regulations. I do not believe, as a general rule, the public is ill served by this arrangement. And I certainly do not agree that whether someone is compensated by fees or commissions, or some combination of the two, that this makes the person or their advise tainted and thus automatically ‘bad.’ Full disclosure to the client is a necessity and reputable advisors do this. Yes, there are some ‘bad apples’ out there, but generally this is the exception and not the rule. Unfortunately, the regulators and media feel the need to punish everyone for the sins of the few.
If someone has a small amount of money to invest, then a simple ‘investment plan’ is probably all that is required. It would be done by the rep making a sale and being compensated by a commission. No RIA status is required.
If someone has a large amount of money to invest, and maybe some really complicated estate and tax issues, business planning, etc, then a more comprehensive ‘financial plan’ would be needed under the RIA hat. This plan would more than likely bring in the expertise of and attorney and CPA. Something this extensive would probably be done for a fee, and it is separate from any investments needed. At this point, the client ALWAYS has the option of deciding to either let the advisor who built the plan take care of the investments, or go somewhere else for implimentation, even DIY. There are so many possibilities for what the investment plan will entail that you can’t use a ‘cookie cutter’ approach. One size definitely does not fit all.
I have not found an advisor who built these extensinve plans for a fee and subsequently took care of the investments that did not offset some or all of the planning fee for income derived from the investments.
Joel, I hope this helps you see where I’m coming from on the subject. I do not believe that compensation is the issue but the attitude of the advisor / rep. If, when you sit down with someone to potentially become your advisor / rep, go by the ‘feel’ test. You should be able to figure out at the first meeting whether this is someone you might like to work with or not. If not, then look elsewhere. If you have a problem with the basic advisor / rep combination, then keep looking for the advisor that you feel is right for you.
By the way, if you want to get a better feel for my position on this issue,check out my response to ‘Spacntime7’ about transferring money between Fidelity and Lincoln Benefit Life and back again. It’s the 4th post.Jim2004-12-22 15:32, By: Jim, IP: [68.1.157.228]

L2: The use of proffesional 72 services…has anyoneWhen does an advisor become a rep (salesman), and when does a rep become an advisor? If you think it’s tough for the client to figure out, try to see it from the advisor / rep viewpoint.
=========================================================
It is never tough for anyone to figure out.
Ex.1. Client is advised to re-configure his 1,000,000 portfolio using 6 classes of investment via no-load mutual funds. Client pays advisor $500 for 3 hours of work.
Ex. 2. Customer is advised to re-configure his 1,000,000 portfolio using the same 6 classes of investment via loaded mutual funds. Customer is advised by salesman that no fee is due because compensation is forthcoming from the mutual fund company. Commission 2 percent or $20,000.
Ex.1 requires on going monitoring to assure continued suitability.
Ex.2. requires suitability only at the point of sale. On going monitoring is not required.
In example 2 customer pays a whole lot more and get much less protection and service than example1. Example 1, there is a fiduciary relationship where non exists with ex. 2.
Peace and hope,
Joel L. Frank2005-01-06 15:49, By: Joel, IP: [67.80.22.51]