How Do High Net Worth People Get Advice?

2,036 investors. Average investable assets: $2.37 million. What did they value when it came to financial information? In the second half of 2008, Dow Jones commissioned Beta Research to conduct a poll of their preferences.

Where do they get their investment advice? The survey found that 74% of respondents went to a financial planner, financial advisor or broker. Interestingly, 37% included “myself” among their choices. 27% of those polled indicated that they would seek investment advice from a spouse or a family member. In contrast, only 23% indicated that they would read a business or financial publication in pursuit of investment advice, and just 13% said they would turn to financial TV programming for advice.

What are their favorite financial news sources? The favorites included The Wall Street Journal, Barron’s, SmartMoney and MarketWatch. CNBC and Morningstar were next in line.
How often are they in contact with their advisor? Well, 36% said between 1-4 times per year. That was the most common response. 22% said between 5-9 times per year, and 12% said 10-14 times per year. Another 4% said 25 times a year or more. 14% reported no contact with their advisor.

What do they talk about with their advisor? The most commonly cited topics were tax reduction, alternative investments, estate planning, emerging markets investing, retirement planning and long term care.

High net worth investors want to be engaged and informed. The survey findings suggest many are well-informed and updated as an effect of their advisory relationship. More than 70% of respondents said their financial advisors send them regular newsletters, and the majority of those recipients said that they read these newsletters regularly. Another 10% of those polled said they would like to receive a newsletter.

The survey bears out that affluent Americans want contact, care and information as they make or consider financial decisions.

Business Roth IRA

Why are more businesses offering Roth 401(k)s? Simply put, more firms are recognizing their advantages – especially when it comes to the retirement planning of professionals, business owners and executives.

Tax-free growth. Roth 401(k) assets grow without being taxed, as employee contributions are made with after-tax dollars. When you withdraw the money in retirement, you don’t pay taxes on it - provided you’ve owned the account for 5+ years and are 59½ or older when you start withdrawing.

With this tax-free growth, a Roth 401(k) can help professionals, business owners and executives save more to get their retirement planning back on track.

No income limitations. Income limits prevent high-salaried individuals from having a Roth IRA. There are no income barriers preventing you from having a Roth 401(k).

No required withdrawals. You don’t have to withdraw money from a Roth 401(k) at age 70½, unlike with a traditional 401(k).

Higher contribution limits than a Roth IRA. How much can you put into a Roth IRA? In 2009, the answer is $5,000, $6,000 if you are 50 or older. How much can you put into a Roth 401(k)? Much more. For 2009, the contribution limit is $16,500 ($22,000 for those 50 or older).

A rollover option. If you leave a business where you have a Roth 401(k), you can roll the money over into a Roth IRA to maintain tax-free growth.

An especially tax-smart move. Keep in mind, the federal government recently decided to spend more than a trillion dollars it didn’t have. Taxpayers will probably bear the cost in the future – particularly the highest-earning taxpayers. The government also needs to fund Social Security and Medicare in coming years. So who knows how high tomorrow’s taxes may be.

What would you rather pay - today’s taxes or tomorrow’s taxes? With all this financial pressure on the government, the consensus is that tax rates will go up. So as you save for retirement, isn’t it wise to have a Roth 401(k) that will let you pay taxes on your retirement savings today, rather than tomorrow?

Join the trend. A 2008 Grant Thornton survey of 186 companies sponsoring retirement plans found that 22% offered Roth 401(k)s, up from 12% in 2007 - and 19% more said they were considering Roth 401(k)s. Employer matches can be made to these accounts with pre-tax dollars.

Is your business offering the Roth 401(k)? It may be time. Owners, executives and professionals are among the highest-earning Americans – the Americans who have the greatest need for their retirement savings to grow tax-free.

Happy 4th of July!!!

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