For weeks, wealthy investors have had lengthy discussions with their accountants to discuss the impact of the new tax laws on their income, business expenses and portfolio.
At some point, their attention will turn to their investments and how the tax laws impact them. And that’s when they will be calling you, if they have not done so already.
The new tax laws which went into effect in late December 2017 will not have overwhelming impact upon the filing of personal income taxes for 2017. Many of the laws will not impact those returns until 2019, and many of the laws create variable outcomes over time. Some of the laws are permanent and some of them are temporary. The impact of the laws varies widely depending on what industry or profession the investor is involved with.
But accountants are going to explain to their clients how those future impacts relate to their future filings, and those investors are going to turn around and contact their advisor to make certain they are taking full advantage of the investment opportunities present in the new federal guidelines.
Advisors and providers are daily investigating and judging the effects of the tax law on investment opportunities, and much has been written and said about which types of investments are likely to experience the greatest positive impact. While the corporate tax rate reduction impacts companies, there are many results that will impact individual investors as well. Company stock prices, companies taking advantage of the new pass-through language for LLCs, and the opportunity to expense capital investments will all make certain companies more attractive stock busy for individual investors.
Changes in personal tax laws are harder to gauge. The increase in the standard deduction, caps on mortgage interest deductions, and reductions in the deduction of state and local taxes will impact investors.
Advisors around the country are educating themselves on these changes and attempting to determine the best path to take for the wide variety of investors with whom they work.
But, in educating themselves, advisors also need to take a refresher course on the portfolios of all of their clients.
Spectrem research shows time and again that investors love proactive action by their advisors, usually in the form of informative phone calls or emails. But it is very likely they will appreciate an advisor who displays the forethought to have a plan in mind when they place the call to discuss what they have just found out about the tax implications.
These tax changes are widespread. The effects of these tax laws are likely to be volatile depending on how individual corporations respond to the new bottom-line opportunities the tax laws present. It is likely that no two investors are going to be impacted in identical fashion by the new corporate and personal tax laws.
Advisors can get ahead of the curve by creating a preemptive game plan for each client prior to hearing from their client, who will themselves be educated by their accountant on the impact of the tax laws on their 2018 tax filing.
These clients are going to want personal and up-to-date advice regarding the tax implications upon their investment strategies. They are going to want responses from their advisor to information they have received from their accountant. They are going to want to know their advisor is fully informed, not only about the tax laws but about their own portfolio.
Predict the questions they are going to ask, and prepare responses specific to their financial situation. Have a game plan of advice for each investor, and if some investors don’t make the call in the next few weeks, call them or contact them with your thoughts tailored to their own needs.
Being proactive with clients is almost always the correct move to make, but it does not always mean making first contact. Being prepared for a client’s call is another form of proactivity.