of coins are generally a lot more pre-
There are fewer Than
dictable than for, say, paintings, Henn
says. “We know the approximate value
of the coins,” Henn says, “whereas
with an artwork, you’re guessing until
it goes to auction, unless you can find
a private market.”
Planners and clients should
consider carefully before wading into
this market nonetheless, Henn says.
Rare coins are “something you want
to have for a long time.”
As an investment, a rare coin is
“more appropriate for families or indi-
viduals with higher amounts of wealth.”
A 2007 study found that from 1979
through 2006, the average return for a
coin mix graded as “mint” was 13.3%.
now in exi STence.
Such IRAs can include many
types of non-financial assets, such
as real estate, some rare coins, even
racehorses and bowling alleys, as
long as the asset is not for personal
use. Real estate, for instance, must
be for rental only.
back at their retirement investments
has not returned anything, and we’re
seeing the regulatory environment
shift toward more independent IRAs
offering more flexibility in a wider
range of assets.”
A self-directed IRA investor may,
of course, seek the advice of a finan-
cial planner. Pensco has a network of
nearly 7,000 independent advisors
with which the company works.
When it comes to exotics, independent advice is certainly in order.
As niche investing draws more interest, the dangers are also rife.
Custodial fees for self-directed
IRAs can be high. Violating tax rules
can jeopardize all the money in a tax-
Wine investors are at the mercy of weather and vine-eating pests, as
well as changes in taste among wine connoisseurs.
Henn, who works on a fee basis,
has helped some clients enter rare
coin investing. Other planners or
advisors who may not be experts
themselves can negotiate fees for
helping clients find appropriate consultants or dealers.
When a successful niche investment like a portfolio of rare coins
is cashed out and reinvested in traditional assets, a planner can benefit from an increase in assets under
management, Henn says.
Much of the growing interest in non-financial assets comes from investors seeking to diversify retirement
portfolios. Yet a whole new layer of
complexity is added when high-net-worth investors include the assets in
Art and most collectibles, however,
are prohibited. If prohibited assets are
included in an self-directed IRA, the
whole account becomes taxable.
Alternative-asset IRA providers
ensure that IRS and Department of
Labor rules are followed, although the
firms don’t act as financial planners.
REAL EStAtE Boom
Kelly Rodriques, CEO and president
of Pensco Trust in Denver, one of the
largest alternative-asset custodians
in the country, says the company’s
assets now stand at $11 billion and
have been doubling roughly every
four years. Some of the biggest gains
have been in real estate.
“What we’re seeing is the perfect
storm,” Rodriques says. “We’re see-
ing boomers near retirement age at
the same time as the 10-year look
deferred qualified fund. Given the risk
profile and illiquidity of exotic invest-
ments, most remain suitable only for
Elena Mannes, an independent television documentary director, writer
and producer in New York, has contributed to ABC News and CBS News.
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