President Biden’s plans to raise taxes for the highest paid and richest Americans offer financial advisors the greatest opportunity in decades to grow their business with high net worth clients and business owners. The last big opportunity came in the 1980s, when income taxes were higher and inheritance tax exemptions were lower.
Consultants who use this time wisely to work with accountants and perhaps other financial services experts will be armed with a significant competitive advantage in the years to come.
Successful financial advisors all have vision, skills, and scope. With significant tax hikes and law changes likely, should the American Families Plan become law, vision in this case means a sophisticated and up-to-date understanding of how you can use tax law to grow your business.
For example, which customer assets will be least and most severely affected by these potential tax law changes? What is the best way for your customers to act strategically in what is certainly a challenging time, should these proposals take effect?
Now is the time to model results. Anyone who waits until the tax law change is passed, or worse, until the end of the year, when everyone else is thinking about charitable and other donations, wishes they had planned ahead.
I believe consultants can increase their sales by 30% simply by adding the right skills and reach to their service model. At the present moment, that means bringing on board professionals who really understand the implications of tax law. This is the time to do your homework and shop around, chances are the same CPA you’ve been referring clients to for 30 years may not be the person with all the answers to future tax law.
Skills in this case can also mean financial advisors need to use all of the tools in their toolbox. Life insurance and annuities could become heavily used avenues if the proposal to incorporate the value and growth of an asset is implemented. Financial advisors will need to teach their wealthiest clients the concept of net return when these tax law changes go into effect. Estate planning could be very lucrative for financial advisors right now. Finally, a consultant with $ 1 million in after-tax sales could potentially see a significant increase in income tax. That means either making a substantial loss or seizing other opportunities, such as life insurance, to replace lost income.
Now is the time for consultants to work harder than usual to gain more control over their practices and produce positive results for their clients. Because of this, we consider partnering with a CPA to be a superior option for referring a client to a CPA. One reason for this is that if you refer a client from your own practice, you lose control of the advice the client is getting – and if you hand a client a business card for a CPA, you risk losing the client the fee Feeling that he is paying his financial advisor is fierce and pointless.
But the financial advisor, who includes outstanding CPAs and lawyers in his practice and puts together a team of the best financial experts at his (socially distant) conference table, is worth gold to a client.
The time is now. Start your research and assemble your team. You don’t want to go back to elementary school gymnastics class and be forced to choose from the bottom of the barrel. And remember – the most valuable player in the game is often the quarterback.