President Biden’s plans to increase taxes on the highest earners and wealthiest Americans presents financial advisors with their greatest opportunity in decades to grow their business with high-net-worth and business owner clients. The last big opportunity was in the 1980s when income taxes were higher and estate tax exemptions were lower.
Advisors who use this time wisely to partner with certified public accountants and perhaps other financial services experts will find themselves armed with a significant competitive advantage in the years ahead.
Successful financial advisors all have vision, capabilities and reach. With significant tax raises and code alterations probable should the
For instance, what client investments will be least and most impacted by these potential tax law changes? What’s the best way for your clients to be strategic during what will certainly be a challenging time should these proposals become law?
Now is the time to model outcomes. Those who wait until whenever the tax law changes are enacted or, worse yet, until the end of the year when everyone else is thinking about charitable and other gifts, will be wishing they had planned ahead.
I believe that advisors can grow their businesses by 30% in revenue simply by adding the right capabilities and reach to their service model. In the current moment, that translates to bringing aboard professionals who truly understand the tax law implications. This is the time to do your homework and look around because it is quite possible that the same CPA you have been referring clients to for 30 years may not be the person who has all the answers when it comes to future tax law.
Capabilities in this instance can also mean that financial advisors will need to use all of the tools in their toolbox. Life insurance and annuities could become avenues that are heavily utilized if the proposal related to incorporating an asset’s value and growth is enacted. Financial advisors need to impress upon their wealthiest clients the concept of net return if these tax law changes pass. Estate planning could be highly lucrative for financial advisors at this time. After all, an advisor doing $1 million in revenue after taxes could potentially see a significant income tax increase. That either means a sizable loss or seizing other opportunities such as life insurance to replace lost income.
The time is now for advisors to work harder than usual to gain more control of their practices and garner positive results for their clients. This is why we consider partnering with a CPA a superior option to referring a client to a CPA. One reason is that when you refer a client out of your own practice, you lose control of the advice the client is getting — and handing a client a business card for a CPA risks making the client feel the fee they’re paying their financial advisor is hefty and unrewarding.
But the financial advisor who incorporates stellar CPAs and attorneys into their practice, assembling a team of the best financial minds around their (socially distanced) conference room table, is worth their weight in gold to a client.
The time is now. Start doing your research and assembling your team. You don’t want to flashback to grade school gym class and be forced to choose from the bottom of the barrel. And keep in mind — the most valuable player in the game is often the quarterback.
