The Advisor Institute: Coach's Corner
Are you discussing potential tax changes?

Practical messages intended to help you elevate the success of your practice.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By David GordonDirector, Eaton Vance Advisor Institute

      Surveying high-net-worth and ultra-high-net-worth investors in 2018, Spectrem Group found that more than 90% expected their wealth managers to provide tax planning advice and wealth transfer advice. Unfortunately, only about a quarter of wealthy investors say they actually receive these services from their wealth managers.1 How might we interpret this discrepancy? A couple of interpretations seem sensible.

      1. It is possible that many wealth managers believe they are already providing these expected services, but they might not be doing so explicitly. If you are providing these services for your clients, do they know? How do you know they know? Instead of assuming they know, tell them exactly what you do to improve their tax outcomes.
      2. Perhaps even more compelling, three out of four wealthy investors are hungry for an After-Tax Advisor. If you are interested in attracting new clients, those are nice odds.

      Fast forward to 2020

      It is reasonable to expect that the 2020 election could usher in tax changes. Regardless of the outcome of November's election, governments will need to raise revenue to pay the bills they have accumulated during the pandemic. As an After-Tax Advisor, are you prepared for how this reality might affect your current clients?

      • If federal, state and local income taxes rise, investors' declining after-tax income could require lifestyle adjustments
      • If property taxes rise, investors may consider moving
      • If sales taxes rise, investors may decide to either accelerate planned purchases or postpone them indefinitely
      • If investment taxes (capital gains, dividends, etc.) rise, investors might choose to realize gains in highly appreciated assets as a way to "reset cost basis"
      • If estate taxes increase, investors may reevaluate their estate and wealth transfer plans

      Although you cannot know precisely which rates may change — or how — what matters now is that you start preparing clients for the possibility of change. Identify and discuss what-if scenarios to help clients see the big picture so you can work together to make necessary changes when needed.

      The potential for tax changes also presents a growth opportunity. For a prospective client to change advisors in the middle of a pandemic, you need to address a challenge that their current advisor is not addressing. Show prospects what it feels like to be a client of an After-Tax Advisor.

      Bottom line: The 2019 filing deadline has passed. Now's the time to start focusing your attention on how potential tax changes could affect existing and prospective clients.

      tax forward