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Alternative Investments

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Dec 15, 2007 5:53 pm

I’m always reading posts about Jones having a very limited selection of products from which their FAs can choose for clients. 

  It's very common for me to invest a client's rollover in mutual funds, their IRA contribution in funds, their long-term money in their taxable account in mutual funds (when they don't have a need for tax-free income), and their 529 money in mutual funds.   I often wonder if there is something else I should be offering to my clients who own mutual funds galore.   What are some of these alternative investments you indy guys use that offer such a huge benefit to your clients?
Dec 15, 2007 7:46 pm

Transamerica Idex just came out with a mutual fund that invests in alternative strategies. I don’t know if Transamerica’s on your approved list…

There’s fixed income products including but not limited to UIT’s, long-short funds, hedge funds, closed-end funds, leveraged funds(like Rydex), ETF’s, leveraged ETF’s, sector plays, ETF’s that are sector plays, geographic plays, gold & energy, gold & energy ETF’s, options, energy partnerships, limited partnerships, real estate, triple-net investments, private equity, art, cars, wine, stamps, etc. etc. etc. Most of these the majority of clients have no desire or need to be involved in. If your bread and butter is the $200 - $1MM client, you’re fine where you’re at. An alternative investment for these folks is a wrap acct where you’re not managing their money day to day!

I work in a bank & will from time to time use options to protect a client’s net worth if the client has a lot of cash in one company that he wants to pass to his kids w/ a stepped-up cost basis. I’m going to help a client do a 1031 exchange from a business to a triple-net investment(which I’m not being paid a commission for) because she wants out of the business she’s in, doesn’t want to be actively involved in running a new business, and can’t afford to lose $75K to capital gains taxes.