10 Questions Every Client Should Ask (And Advisors Should be Prepared to Answer)

1. What Kind of Credentials Do You Have?

Mag Black-Scott, CEO of Beverly Hills Wealth Management: Certainly credentials are a measure, but only one. Most importantly, you need to demonstrate that you fully understand the client's current situation, aspirations and needs for the future, and articulate clearly how they can reach their goal. If it's a case where they "can't", be ready with a realistic scenario of what they can expect to achieve.

2. What Books Have you Read on the Topic?

Mag Black-Scott:
"The 7 most important Equations for your Retirement" - Moshe A. Milevsky

"Parlay your IRA into a Family Fortune" - Ed Slott

"Managing Downside Risk in Financial Markets" - Frank Sortino and Stephen Satchell

"Cracking Your Retirement Nest Egg" - Margaret A. Malaspina

"Retirement Income Redesigned" - Harold Evensky, Deena Katz & Walter Updegrave

"Your Complete Retirement Roadmap" - Ed Slott

"The Handbook of Portfolio Mathematics" - Ralph Vince

"The Big Retirement Risk" - Erin Botsford

"The Calculus of Retirement Income" - Moshe A. Milevesky

"Are you a Stock or a Bond?" - Moshe A. Milevesky

"Lifecycle Investing" - Ian Ayres & Barry Nalebuff

3. What Professional Training and/or Course Work Have Your Completed?

Mag Black-Scott: You must stay aware of tax changes in addition to client life event changes, and be prepared to adjust course based on the situation. Keeping on top of articles and publications outlining IRA distribution issues and strategies is also a must - for example, the IRA planning and execution that went into Mitt Romney's wealth building.

4. How Do You Stay Current on Key IRA Tax Laws?

Mag Black-Scott: CPAs and Tax Attorneys are frequently unaware of certain changes - due to infrequent use for clients - and so it is up to professionals like us to stay on our toes and share this information with them. When in doubt, consult IRS Publication 590 - Individual Retirement Arrangements.

6. How Do You Determine the Best Option for my Lump Sum Distribution?

Michael Fein of CIC Wealth Management: The best way is to work backwards. Generally we will first meet with the CPA to determine where their tax bracket was and will be. From there, based on the CPA recommendations, we work backwards using different strategies to minimize ordinary income to stay within the lower tax bracket if possible and pull from other accounts (i.e. after tax dollars).

9. Do You Know What Will Happen to my IRA after I die? How Will You Make Sure that My Beneficiary Will Get the Stretch IRA?

Mag Black-Scott: When the owner of an IRA dies, the beneficiary(ies) are eligible to retitle the IRA account as an inherited or beneficiary IRA in the name of the deceased owner. The beneficiary may then begin taking Required Minimum Distributions based up the beneficiary's age, instead of having to take the entire sum all at once and pay tax on it, or having to use a five year distribution rule that can come into effect if the process isn't followed correctly. Knowing these common mistakes enable you to help the client avoid them. Be aware there are many factors that come into play regarding how your IRA can be treated after your death. The first step is to understand the client's situation and desires.