Ed Slott on IRAs, taxes and the educated advisor

SMA: It’s clear the potential is there, but what can advisors do to take advantage of this vast opportunity?

SLOTT: The way to attract this money is to get educated. Big money is available to an educated advisor. But you need special knowledge. Look at it this way. This is money people already have. Their biggest risk with this money is taxes. So there’s a huge competitive advantage for educated advisors.

But let me switch gears for a second. Many advisors take advantage of continuing education. But too often that education is geared towards product training, marketing training, sales training. You have to remember this: The people who already have money want protection from taxes. People with money want a plan. They don’t want to know what to invest in. They want to hang onto the money they have.

SMA: Is there anything in this field that advisors can do a better job of than what they’re currently doing?

SLOTT: Again, the key is they have to be educated to know the options. You have more consumers than ever in the right demographic. You have a very tax-favorable environment. If you, as an advisor, are going to do the rollover, you need to know how to do the rollover. Advisors need to know if they should take the Roth, should they rollover? Look, a clerk can do the rollover. Consumers can go the 1-800-rollover route. But the advisor needs to stand out and give the expertise.

Frankly, too many advisors do not invest in the education. Once they are educated on the subject, it’s amazing how much that attracts the money. Once clients talk with them, they see the expertise. They understand the educated advisor knows what to do with their money and that they’ll protect them for life.