After a weak yr in financial markets, investors’ priorities have naturally shifted from wealth accumulation to wealth preservation. While risk management is the important thing component to wealth preservation, what is usually ignored is how much intelligent tax planning can assist clients retain more of their wealth.
Clients remain loyal to their financial advisors once they realize they carry far more value than simply identifying the best-performing investments. When you consult with clients in regards to the full range of services you offer, including sophisticated tax planning strategies, you strengthen existing relationships and attract more prospects.
Below are some suggestions on find out how to improve your tax planning. You may already be running all or most of those. So consider these ideas as a checklist to find out in the event you are using all best practices or if there are areas where you wish improvement.
Regardless of what happens in 2023 – whether markets recuperate or a recession creates further challenges – expanding and demonstrating the worth you’ll be able to offer your customers will probably be an enormous advantage. If there are only lemons within the markets, it is going to assist you make lemonade.
1. Strengthen your relationships with top accountants
Your contact list may already be stuffed with tax professionals who can assist clients file their forms and reduce their annual tax bill. But how close are these working relationships? If your partnership with each accountant doesn’t repeatedly lead to mutual referrals, it might not be as strong because it might be. Make sure you’re employed with probably the most expert and talented tax professionals. Do they deliver modern and complex customer solutions? How much experience do you may have with wealthy clients? Depending on the answers to those questions, chances are you’ll need to construct additional relationships to make sure your customers receive the very best service.
2. Improve your tax planning technology skills
Are you currently only searching for tax loss harvesting opportunities within the last quarter of the yr? Do you depend on spreadsheets or manual processes to discover them? If so, work with technology partners to automate tax collection for you and your customers. You can discover tax savings opportunities all year long and implement them in a way that shouldn’t be burdensome and time-consuming for you and your employees.
3. Educate your clients about tax planning options
Tax laws are always changing, but lately there have been more changes than usual. So offer your customers regular, colloquial communication explaining what’s different. For example, send an email, newsletter, short video, or blog post in regards to the Secure Act 2.0 laws passed late last yr. The law increases the age limits for required minimum distributions (RMDs) from IRAs and retirement plans and provides opportunities to convert unused funds in a 529 college savings plan right into a Roth IRA for the account’s beneficiary.
Such messaging ensures that customers are taking full advantage of those latest rules and emphasizes that you simply are monitoring legislative and regulatory changes in how customers can make the most of them. Do your wealthy clients know that the upper federal estate tax threshold is ready to run out in 2025 unless Congress extends it? Or that estate planning vehicles like Spousal Lifetime Access Trusts (SLATs), for instance, can maintain their higher inheritance tax threshold? Keeping your customers informed about this stuff shows that you simply are proactive on their behalf.
4. Broaden your tax planning approach
Tax-advantaged retirement and college savings plans, in addition to municipal bonds, are amongst the very best investment vehicles for reducing clients’ taxes. However, clients need to know that your tax planning recommendations may extend beyond these basic pillars. For example, if clients have high-deductible medical health insurance, consult with them in regards to the advantages of health savings accounts (HSAs) to save lots of for future medical needs, especially in retirement.
Good tax management strengthens wealth preservation
Even if financial markets fully recuperate in 2023, many investors will hold on to certainly one of the important thing lessons of 2022: that wealth preservation is essential in any environment. Showing your clients and prospects the whole lot you’ll be able to do to reduce the impact of taxes on their savings and investments underscores your commitment to preserving their wealth.
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