How to Get Paid for Retirement Plan Advice: After-Tax Dollars

In my earlier blog, I explained how advisors can get paid for individual company retirement plan advice in pre-tax dollars. A second way to get paid for this retirement plan advice is directly through personal checks. 

In June of 2009, Jack Reutemann of Research Financial Strategies and I began to present the “No More Pies” seminars for Bill Good Marketing. 

The first day of the seminar, I teach the finer points of the Dorsey Wright & Associates, Inc. database.  The second day of the seminar Jack teaches the fine points of his technical analysis and tactical asset allocation-based stock market risk-management game plan.

A big part of the two-day seminar is focused on how to provide investment advice to individual company retirement plan participants. The seminar content includes how to work with a fixed menu of company retirement plan mutual funds or the Self-Directed Brokerage Account, or SDBA, option.

Jack is a master at the concept of prospect and client presentations, and one of the major parts of his presentations focuses on providing the prospect or client with the option of paying company retirement plan investment advisory fees either in pre-tax or after-tax dollars.

A key point Jack shares is that it makes no economic sense for the client to pay asset management fees from a qualified plan account.

As an example, an individual retirement plan advice client with a $1 million company retirement plan account would pay annual advisory fees of 1.5% or $15,000 per year.

Those advisory fees would be deducted from the company retirement plan account. In this case, the annual advisory fees would almost completely wipe out that client’s annual contribution of $17,500 if he or she is under 50 years old or $23,000 if he or she is over 50 years old.

A qualified plan account has a finite amount of money contributed during a client’s working career through employer contributions, employee contributions or growth of principal.