It’s been just over a year since I ran my newsletter WARNING advisors NOT to use bonus annuities to “pay the tax” on Roth IRA conversions. While I’m not going to re-explain the full concept here, in short, an advisor simply pitches a 20-25% bonus annuity and says that’s the “extra” money the client can use to pay the taxes on a conversion.
Unfortunately, it’s a mathematical failure, and why I’ve gone out of my way to warn advisors.
13-Page White Paper
Why Bonus FIAs to “Pay the Tax” on Roth Conversions are a Failure (White Paper)
If you are pitching this to clients, using it for marketing, or if you want to hammer competitors using this sales tactic, you should read this white paper. Click on the following to download:
https://advisorshare.com/bonus-fias-roth-failure
Most Deceptive Sale in the Industry Today?
Who pushes this concept on advisors? Insurance marketing organizations(IMOs).
Many of them will push any concept, whether good or bad or even one that is deceptive.
Why is this concept hot? Well, on its face, the concept sounds like it makes sense, and it has helped many advisors sell millions in Fixed Indexed Annuities (FIAs) to unsuspecting clients.
FULL DISCLOSURE—I’M THE FOUNDER OF AN IMO
I don’t hit advisors with ads in my newsletters about our “advisor-owned” IMO Advisor Share https://advisorshare.com. I started it so I didn’t have to be associated with IMOs that pitch garbage like bonus annuities to pay the tax on conversions.
Bonus Annuities is Sexy Marketing
I have examples of ads that show up in my Instagram feed about how to convert with “no out-of-pocket cost.” The following is my least favorite ad by a firm that many IMOs have gotten in bed with due to what I would guess is their greed, and I know is their ignorance.
What jumps out at you about this ad?
1) It’s a Roth Blueprint ad. Roth Blueprint is a marketing platform with software. I’ve seen several outputs from this software, and not only do they appear to be inaccurate, but they appear to be woefully inaccurate. It’s always possible they’ve re-done their software to make it accurate, and I haven’t seen the updated version, but I did see a recent client output, and that doesn’t appear to be the case.
If you are using this software, or if the founder of Roth Blueprint wants to get me example numbers that show why my opinion is wrong, I’ll do a newsletter on why I’m wrong.
2) They are touting themselves as Roth conversion “Experts.” If your numbers are not accurate, you shouldn’t be touting to consumers that you are an expert.
3) The verified expert checkmark is also misleading (at least to me). It DOES NOT mean a 3rd party has verified that the person or firm offering the ad is a verified expert in the subject matter.
Money over Ethics
This concept is everything that is wrong with the insurance industry. It puts money over professional ethics and doing what’s best for clients.
Education = Better/More Suitable Advice
I’ve taken several steps to help advisors run “accurate” numbers for clients:
1) We spent over 18 months adding a Roth conversion module to our OnPointe Retirement planning software. We also reverse-engineered every other major retirement planning software (Emoney, MoneyGuide Pro, Right Capital, Income Lab, Retirement Analyzer, etc.), and concluded that NONE OF THEM run accurate numbers.
If you haven’t checked out our OnPointe Roth conversion app (and feel free to 2nd guess our numbers), click on the following: https://onpointesoftware.com/roth-app-sign-up
2) We wrote “the” authoritative book on the subject: Deconstructing Roth IRA Conversions: Myth vs. Reality. To download Chapter 2 for free, listing the 30+ different variables you MUST use to calculate Roth conversion numbers accurately, click on the following:
https://deconstructingrothiraconversions.com/roth-conversion-variables
Yes. This is our updated cover and you can get the book on Amazon by clicking here.
3) We created the ONLY Roth conversion certification for advisors (vs. some gold checkmark on an Instagram ad): Certified Roth Conversion Specialist™ (CRCS™). To obtain the CRCS™, you have to take a 130-question exam and a four-question practical.
To learn more, go to https://certifiedrothconversionspecialist.com
RoccyKnows YouTube Channel
“Fee-Only” Advisors: The Good, The Bad, The Ugly
Every week I plan to post a NEW YouTube video. Last week’s was on my favorite topic, “asset protection”. This week’s is on my least favorite type of advisor in the industry (“fee-only”).
To watch the NEW consumer YouTube video, click on the following link or video:
https://www.youtube.com/@RoccyKnows/videos
