By

Dave Alison, CFP®, EA, BPC

How Financial Advisors Can Attract and Retain High-Net-Worth Clients in 8 Steps

Author

Are you trying to attract and then retain high-net-worth (HNW) or ultra-high-net worth (UHNW) clients? Many financial advisors are… so what can you do to stand out from your competition and win these clients?

You can position yourself as the go-to advisor for affluent individuals with three actions:

  • Offer comprehensive wealth management and financial planning services.
  • Target the right audience.
  • Provide exceptional client experiences.

How? Let’s explore some key strategies to help you succeed with high-net-worth clients.

[Related: Advanced Tax-Efficient Planning for High-Net-Worth Clients]

1. Offer Holistic Wealth Management Services

HNW and UHNW individuals are looking for advisors who can address all aspects of their often complicated, financial lives.

It’s the same reason many of these individuals may establish a family office — a team including a financial advisor, tax specialist, estate planner, accountant, and more — to comprehensively manage the family’s finances with personalized services to grow and protect their wealth.

Consider incorporating financial planning aspects like these and more into your client’s plan, like a family office would:

  • Tax management
  • Asset management
  • Estate planning
  • Insurance or protection planning
  • Social Security planning

As many as 48% of millionaire investors would consider changing advisors to move to one offering more comprehensive financial advice

By expanding your service offerings beyond basic investment management to a holistic approach, you can provide more value to these clients and deepen your new or existing relationships.

Let’s look at three ways to do so.

[Related: Charging the Right Financial Planning Fees as an Advisor]

2. Minimize Your Clients’ Taxes with Tax Management Services

Just about everyone wants to legally save on taxes, especially high-earners and high-net-worth individuals whose taxes are often a major factor preventing them from reaching their financial goals.

By actively managing your clients’ taxes and incorporating tax strategies into your planning process, you can help them minimize their tax burden while optimizing their overall financial picture.

Integrating tax management strategies like the following into your services can significantly enhance client retention and satisfaction:

  • Tax-loss harvesting
  • Roth conversion planning
  • Charitable giving strategies (e.g., donor-advised funds, charitable trusts)
  • Tactical asset location across taxable and tax-advantaged accounts

Plus, tax management is an incredibly appealing service not every advisor provides which can help you differentiate your offerings. Market researchers CEG Insights (formerly Spectrem Group), found that 92% of those surveyed expected tax planning advice from their financial planning professional, but only 25% of clients received that service.

3. Position Life Insurance as an Asset Class & Advanced Planning Solution

Life insurance may seem unnecessary to individuals with at least $1 million liquid or investable assets as they have enough wealth to pay out or support their beneficiaries when they pass. But what financial professionals who serve high-net-worth individuals know is that it can play a crucial role in tax-efficient planning. The key is to help clarify this for clients so they see the value.

Life insurance offers tax-deferred growth, income tax-free death benefits, and potentially tax-free distributions when structured properly.

Consider working advanced life insurance strategies into your high-net-worth and ultra-high-net-worth clients’ wealth plans, such as:

  • Irrevocable life insurance trusts (ILITs) for estate tax planning
  • Premium financing for large policies
  • Combining life insurance with long-term care benefits
  • Using life insurance in business succession planning

[Related: Positioning Life Insurance in a Holistic Financial Plan]

4. Secure Multi-Generational Relationships & Legacies with Estate Planning Services

For UHNW clients, consider offering comprehensive estate planning services that mirror those of a family office. This may include the following:

Keeping a network of attorneys and CPAs in your circle will help you implement complex estate plans.

By being strong in legacy and estate planning, you have a unique opportunity to connect with your next generation of potential clients by working with their children or family. These referral-based relationships can be some of your strongest as an advisor, so it’s important to nurture them. You can do this by leveraging organizational tools like the Family Estate Organizer (FEO) to streamline processes and provide comprehensive support. You can also host educational family meetings or offer to create financial plans for beneficiaries.

[Related: Simplify the Way You Talk to Clients]

5. Identify Your Niche Audience to Target & Cater To

While serving high-net-worth clients in general is valuable, specializing in a specific niche can help you further stand out to them and attract your version of your ideal clients.

Simplifying Equity Compensation & Stock Options for High-Net-Worth Clients

C-suite executives and employees with significant equity compensation are often already qualified to work with you from an asset perspective, so consider developing the necessary expertise to serve their advanced planning needs. This demographic benefits most from financial advisors who can skillfully do these things:

  • Exercise stock options.
  • Prepare for an initial public offering (IPO).
  • Understand restricted stock unit (RSU) planning.
  • Handle 10b5-1 trading plans.
  • Manage concentrated stock position.

6. Provide 11-Star Client Service

Exceptional service is crucial for attracting and retaining HNW clients because this clientele expects an elevated standard. Go above and beyond to create memorable experiences and to differentiate yourself with prospects, current clients, and boost referrals.

Some ways to elevate your client service include:

  • Personalized parking spaces: Reserve a parking spot with the client’s name when they visit your office.
  • Welcoming reception: Have a team member greet clients, offer refreshments, and start a conversation before the meeting.
  • Thoughtful gestures: Send personalized letters along with fruit baskets instead of flowers for condolences, plants for sick clients, and Valentine’s Day candy to widowers.
  • Celebrate milestones: Acknowledge birthdays, anniversaries, and new grandchildren with small gifts or gestures.
  • Host special events: For significant milestones like anniversaries or notable birthdays, consider organizing and or funding a celebration for the client and their family.

[Related: Innovative Client Appreciation and Prospecting Events for Financial Advisors]

7. Prioritize Your Marketing Efforts

You need a strong marketing strategy that showcases your expertise and value proposition to attract HNW clients.

Having a niche will also come in handy here as the more you tailor your messaging to your target audience, the more likely it will resonate with them.

Ensure your marketing appeals to your ideal clients and their unique challenges:

  • Marketing materials (Who we serve page on your website, email campaigns promoting the latest tax updates, etc.)
  • Content you create (like blogs, videos and podcasts)
  • Organic and paid social media efforts

Consider the following marketing tactics:

  • Develop a professional website highlighting your services and expertise
  • Create high-quality content (blogs, videos, podcasts) targeting your ideal clients and the challenges they face
  • Leverage social media to share insights and engage with prospects
  • Target interests or relevant traits of your ideal audience in paid social media marketing
  • Host educational seminars or webinars on topics relevant to high-net-worth individuals

8. Become a Thought Leader

Developing trust with any client takes time — how do you convey your credibility immediately to HNW clients seeking expert guidance?

Consider taking steps to establish yourself as a thought leader in your niche. You can attract your ideal clients’ attention in distinct ways:

  • Produce valuable, timely, highly personalized content.
  • Appear as a respected authority in the industry.

Here are four methods to build your reputation:

  • Speaking at industry conferences and local events
  • Contributing articles to respected publications
  • Pursuing advanced designations and certifications
  • Developing proprietary planning processes or frameworks

Grow Your HNW Client Base With C2P 

Attracting and retaining high-net-worth clients requires a multifaceted approach. It combines comprehensive services, targeted marketing, and exceptional client experiences. By implementing these strategies and continuously refining your approach, you can build a thriving practice serving affluent individuals and families.

Learn more strategies like these and how to master them – book a call with C2P to explore how we can help you take your practice to the next level and succeed with high-net-worth clients.

Subscribe to our podcasts to stay updated on the latest news and insights from industry leaders. Our podcasts include The Bucket Plan®The Rainmaker Multiplier, or A Woman’s Clarity®.

 

For Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

 

Year-End Charitable Giving Strategies: A Guide for Financial Advisors

Author

Savvy financial advisors are helping clients optimize their charitable giving strategies, especially as the holiday season approaches.

With proper planning, you too can help your clients maximize their charitable impact while minimizing their tax burden by considering the following strategies:

Qualified Charitable Distributions: Beyond the Basics

Qualified Charitable Distributions (QCDs) represent one of the most powerful tax-efficient giving strategies available to clients over 70½. For 2024, clients can distribute up to $105,000 directly from their IRA to qualified charities, with these distributions counting toward required minimum distributions. What makes QCDs particularly valuable is their ability to bypass Schedule A itemized deductions, providing substantial tax benefits even for clients taking the standard deduction.

Unlike other charitable giving methods, QCDs aren’t subject to Adjusted Gross Income (AGIimitations, offering unique flexibility in tax planning. This strategy extends beyond personal IRAs – inherited IRA beneficiaries over 70½ can also utilize QCDs, creating additional planning opportunities for clients managing inherited retirement assets.

Key Implementation Tips:

  • Ensure checks clear by December 31st for current-year tax benefits
  • Document all QCD distributions meticulously for tax reporting
  • Consider setting up dedicated QCD checkbook access for frequent givers

Donor-Advised Funds: Strategic Timing Matters

Donor-advised funds offer sophisticated planning opportunities, particularly valuable during periods of tax law changes. These vehicles provide immediate tax deductions while allowing clients to maintain control over the timing of charitable distributions. This flexibility becomes especially powerful when working with highly appreciated investments, as clients can avoid capital gains taxes while securing deductions at fair market value.

With the TCJA sunset approaching in 2026, strategic timing takes on new importance. The potential decrease in standard deductions creates opportunities to optimize charitable giving across tax years. Consider “stacking” multiple years of planned giving into a single year to maximize deduction benefits when they’ll provide the most value. Additionally, donor-advised funds offer powerful legacy planning opportunities through successor naming, ensuring family charitable traditions continue for generations.

Asset Selection: Strategic Considerations

When it comes to charitable giving, selecting the right assets can dramatically impact both the tax benefit and overall gifting strategy. High-net-worth clients often hold significantly appreciated stock positions that create substantial capital gains exposure. By strategically selecting these appreciated stocks for charitable contributions, advisors can help clients avoid capital gains taxes while securing a deduction at full market value.

This strategy becomes particularly powerful when stocks are trading at all-time highs. For clients concerned about maintaining market exposure, consider implementing a strategic repurchase of the gifted positions. This creates a valuable cost basis step-up while maintaining the desired portfolio allocation.

Don’t Forget About Documentation

Even the most carefully crafted charitable giving strategy can fail without proper documentation. The IRS maintains strict requirements that demand attention to detail. For all gifts exceeding $250, clients must obtain contemporaneous written acknowledgment before filing tax returns, or the deduction could be disallowed regardless of the gift’s legitimacy.

Essential Documentation Requirements:

·       Written acknowledgment explicitly stating “no goods or services were received”

·       Contemporaneous receipt obtained before tax filing

·       Clear records of all QCD transactions

·       Verification of qualified charity status

Elevate Your Tax Management Expertise

As tax laws grow increasingly complex and high-net-worth clients demand more sophisticated planning, financial advisors face mounting pressure to deliver comprehensive tax strategies.

Through C2P’s Tax Management Journey® training, advisors learn our proven seven-step process for delivering proactive tax management to clients. This comprehensive, 2-day training program equips you with tools and strategies to assist clients with charitable giving, tax bracket management, asset allocation optimization, and strategic timing of distributions.

With that being said, understanding charitable giving strategies is just one piece of comprehensive tax management. Beyond charitable strategies, you’ll also learn how to:

  • Implement proactive tax management throughout the year
  • Convert tax knowledge into higher planning fees and enhanced client value
  • Partner with CPAs and tax professionals to expand your service offerings
  • Attract and retain high-net-worth clients through comprehensive tax management

Take the Next Step

Schedule a 20-minute consultation with our team to see if you qualify to attend The Tax Management Journey® training for free. During your consultation, you’ll also discover how C2P’s comprehensive suite of training programs and resources can help you build a more successful practice.

 

Elevate My Expertise

 

Learn More from Industry Leaders

This blog post is based on insights from myself and Jeff Warnkin, CPA, CFP® of JL Smith Holistic Wealth Management.

Stay current with the latest financial planning strategies by subscribing to our podcasts at C2P:

 

For Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

 

Eight Social Security Myths Examined: Important Insights for Financial Advisors

Author

In the intricate world of retirement planning, Social Security remains both a cornerstone and a source of confusion.

As a financial advisor, you’ve likely encountered clients grappling with misconceptions that could derail their retirement dreams, or at the very least give them pause on when to collect Social Security. But what if you could cut through the noise and dispel the myths to make a more effective retirement income plan for your clients?

Examining Social Security: Addressing Eight Common Myths

Let’s explore eight prevalent Social Security myths and uncover the realities that may help enhance your advisory services.

Myth 1: Social Security Doesn’t Pay Much

Reality: Social Security benefits can be substantial for some recipients. For married couples aged 65 or older in the second quintile of the income distribution (with incomes between $27,538 and $44,424), Social Security comprises more than half of total income for 83.2% of them

A typical middle-income couple retiring at 66 and living to 86 might receive over $1.4 million in benefits. For high-income clients, this could potentially exceed $2.3 million, with some possibly receiving over $120,000 annually.

Myth 2: Social Security Is Running Out of Money

Reality: While the Social Security Trust Fund may face challenges by 2034, benefits are not expected to cease entirely. Payroll taxes could still fund a significant portion of scheduled benefits, and potential adjustments might help ensure long-term sustainability.

Myth 3: Filing Decisions Are Irreversible

Reality: There’s some flexibility in changing Social Security filing strategies:

  • Within 12 months of filing, individuals may be able to withdraw their application and restart benefits later.
  • Between the full retirement age of either 66 or 67 (depending on date of birth) and 70, beneficiaries might have the option to suspend benefits to potentially increase future payouts.

Myth 4: Spousal Benefits No Longer Exist

Reality: While some strategies were eliminated, certain spousal benefits still exist. A lower-earning spouse may be able to claim up to 50% of their higher-earning spouse’s full retirement age benefit, provided the higher-earning spouse is collecting.

Myth 5: The 10-Year Marriage Requirement Applies to Survivor Benefits

Reality: The 10-year rule typically applies to ex-spousal benefits, not survivor benefits. For survivor benefits, the marriage generally needs to have lasted 9 months, with some exceptions, not 10 years.

Myth 6: An Ex-Spouse’s Remarriage Affects Your Benefits

Reality: An ex-spouse’s remarriage doesn’t typically affect your ability to claim benefits on their record, as long as you remain unmarried.

Myth 7: There is an Unlimited Backdating of Social Security Benefits

Reality: Backdating options are limited:

  • Backdating prior to full retirement age is generally not allowed
  • Between full retirement age and 70, backdating may be possible up to 6 months or to full retirement age, whichever is less

Myth 8: Maximum Payout is Always Best

Reality: The strategy that maximizes total payout may not always be optimal. Factors like the time value of money and life expectancy could be considered. Strategies providing more money upfront might be beneficial for some clients.

Enhancing Your Practice with Social Security Knowledge

Understanding these Social Security nuances may help increase your value as a financial advisor. By providing accurate guidance, you can assist clients in making informed decisions about their retirement income strategies.

Are you interested in deepening your knowledge and potentially growing your practice? Schedule a consultation with C2P to learn how we may be able to help you navigate Social Security planning and provide more valuable services to your clients.

Learn More

This blog post is based on insights from The Bucket Plan® On Demand podcast series, featuring a live presentation on Social Security with specialist Ash Ahluwalia, CFP®, MBA.

Subscribe to our podcasts for regular updates on retirement planning, financial planning techniques, and industry insights to keep your practice at the forefront of wealth management.  Our podcasts include The Bucket Plan®The Rainmaker Multiplier, or A Woman’s Clarity®

 

For Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

 

Kamala Harris’ Tax Proposal Explained for Financial Advisors: The Impact on High-Net-Worth Clients

Author

As we gear up for the 2024 presidential election, it’s important to consider about how some of the candidates’ proposals will inevitably affect your financial advisory clients, and therefore how you advise them in their best interest.

Looking at Vice President Kamala Harris’s tax proposal, for example, we see significant changes that would occur, particularly for high-net-worth individuals and families.

These potential tax policy updates may take a bite out of your clients’ assets, so it’s best to start immediately protecting their financial futures through proactive planning and education. Here’s what you and your clients need to know:

Income Tax Increases: What High-Earners Should Expect

Kamala Harris proposes allowing the Tax Cuts and Jobs Act (TCJA) to expire in 2025, which means tax hikes for almost all income levels.

Notably, for those earning over $400,000, Harris supports bringing back the top 39.6% income tax rate. If your clients fall within this income range, now is the time to discuss tax-efficient investment strategies. Additionally, child tax credits will be expanded, including a one-time $6,000 credit for the first year of a child’s life.1

These changes could impact your financial planning strategies, especially for clients seeking to maximize tax deductions for their families.

Capital Gains Tax Hike: Key Considerations

If implemented, Harris’ plan would increase the capital gains tax rate to 28% for households making more than $1 million annually. When combined with her proposed 5% net investment income tax (NIIT), the total rate for high earners would be 33%.2,3

It’s worth noting that if implemented, this would be the highest capital gains tax rate since 1978.3

To help clients this would apply to reduce their capital gains exposure and manage their investment portfolios, consider working with them to implement tax-loss harvesting and long-term holding strategies.

Estate Tax: Significant Changes on the Horizon

One of the most significant changes that may occur involves lowering the estate tax exemption from the current $13.61 million to $3.5 million per individual, or $7 million for married couples. This change, coupled with higher estate tax rates (up to 65%), means your clients with sizable estates need urgent attention.4

 

Business Tax Strategy: Corporate Rate Increases

Be ready to adjust strategies for your clients with significant business interests.

Harris wants to raise the current 21% corporate tax rate to 28%. She also proposes increasing the 15% alternative minimum tax on very large corporations to 21%. 5

Real Estate Tax Strategy: Limiting 1031 Exchanges

Kamala Harris’s proposal places a $500,000 cap on like-kind exchanges (also known as 1031 exchanges), a common tax deferral strategy used in real estate.7

Be prepared to adjust long-term real estate investment strategies for clients who rely on these deferrals.

Wealth Tax and Financial Transaction Tax

The proposal also introduces a 25% minimum income tax on individuals with at least $100 million in wealth. Additionally, Harris proposes quadrupling the existing 1% excise tax on stock buybacks by publicly held corporations to 4%.5

Financial transaction tax on stock and bond trades could erode some investment performance, especially for active traders.

To minimize the impact of taxes if Harris is elected and this legislation is enacted, consider reviewing your clients’ portfolios for long-term investment strategies that can help insulate against the ups and downs of political cycles.

Preparing Your Clients for Potential Tax Changes

As we’ve explored, Kamala Harris’s tax proposals could significantly impact high-net-worth individuals and families. While these changes are not yet law and would require congressional approval, it’s crucial to start preparing your clients for potential shifts in the tax landscape.

How to Start the Conversation

See how Dave Alison, CFP®, EA, BPC, founder and CEO of Alison Wealth Management, positions these potential tax changes to his high-net-worth clients with an informational video he created:

 

Consider sharing content like this with your clients or creating your own version to powerfully demonstrate your thought leadership.

By staying informed and proactive, you can help your clients navigate these potential changes and protect their financial futures.

Standing Out by Staying Informed

Want to learn more about navigating potential tax changes and enhancing your client services? Book a call with our team at C2P to explore how we can help you stay ahead of the curve and provide exceptional value to your high-net-worth clients.

Subscribe to our podcasts for regular updates on tax proposals, financial planning strategies, and industry insights to keep your practice at the forefront of wealth management.

Our podcasts include The Bucket Plan®The Rainmaker Multiplier, or A Woman’s Clarity®.

For Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

 

Sources:

  1. https://www.kiplinger.com/taxes/kamala-harriss-tax-plans-2024
  2. https://www.cnbc.com/2024/09/06/harris-biden-capital-gains-tax-election.html
  3. https://www.cnbc.com/2024/09/10/harris-capital-gains-tax-election.html
  4. https://www.forbes.com/sites/matthewerskine/2024/08/22/kamala-harris-endorses-american-housing-and-economic-mobility-act-tax-proposals/
  5. https://www.kiplinger.com/taxes/kamala-harriss-tax-plans-2024