Financial Planners: Expand Your Practice Through Consultation on Alternative Assets

Published on April 22, 2024

Next Generation Offers Fee-Based, Independent Financial Advisors New Investment Horizons for Clients, and a New Income Stream

Trusted advisors, financial planners, and CPAs who do wealth management are consulted by clients about retirement plans and how to develop the best portfolio—and long-term financial plan—for their specific circumstances. Understanding the many options and benefits of self-direction as a retirement wealth-building strategy helps financial advisors add value to their client-advisor relationship … and add potential additional income for themselves. Here’s how.

Self-directed plans open up investment horizons

Clients can open a self-directed IRA of any type (Traditional or Roth, SEP or SIMPLE), as well as HSAs and ESAs (Coverdells) and include a broad array of alternative assets within those plans. Doing so can build a more diverse retirement portfolio as well as a hedge against stock market volatility, with nontraditional investments they already know and understand. Investors may already hold those assets outside of their existing retirement plans (such as investment property or precious metals); including them in a self-directed IRA enables them to grow their retirement savings with the same tax advantages as typical retirement plans which are far more limited in terms of the assets they allow.

As the term “self-direction” connotes, investors are self-directed, in that they are comfortable making all their own investment decisions, and conducting research about the investments as well as due diligence before sending investment instructions to our team. However, that doesn’t mean they won’t turn to their trusted advisors for guidance; therefore, understanding how self-directed retirement plans work, coupled with firsthand knowledge of a client’s retirement goals, investment preferences, and risk tolerance will enhance the unique relationship financial planners and others have with these investors.

Although financial advisors have been historically limited by only being able to share more traditional investments (usually stocks, bonds, mutual funds), non-publicly traded alternative assets—like those allowed in a self-directed IRA—enable advisors to work more responsively with clients’ investing goals and align certain investments with greater creativity and variety.

Guidance for financial advisors from Next Generation

Recognizing this, Next Generation has created a web page for financial advisors that provides an overview of self-directed IRAs and the many types of alternative assets these plans allow. You’ll find it, with good talking points to share with clients, under the Information & Education tab.

Independent fee-based financial advisors will be pleased to know that Next Generation’s advisory structure enables those professionals to direct their clients’ investments according to their existing advisory agreement and earn more fees on any assets Next Generation holds for their clients.

In the past, when their clients wanted to invest in alternatives that were not publicly traded, advisors in traditional financial institutions (bank, brokerage firm) had to refer clients and those funds elsewhere, potentially losing revenue from those referrals. When working with Next Generation, the advisors may bill for and get paid their fees directly from clients’ accounts.

If you are a financial professional or CPA who consults with your clients about investments and retirement plans, you may also want to open a self-directed retirement plan as you learn more about this strategy. If so, we invite you and your clients to register for a complimentary educational session to deepen your understanding of self-directed retirement plans and the alternative assets they allow.