Tax reform can be a growth engine for your advisory firm

Only 4 of 10 millionaires who have an adviser said their adviser had talked to them about the impact of tax reform

Dec 13, 2018 @ 11:38 am

By David Canter

Business 101 teaches us that in order to grow a business, you need to continually iterate, providing products or services that solve problems and meet the needs of consumers. For millionaire investors, one of the things we found that they needed was advice on how to navigate the new tax rules.

Fidelity's annual Millionaire Outlook study revealed that tax reform provides an opportunity for advisers to connect with potential clients — but that opportunity may have been overlooked by most.

Deepen Relationship with Current Clients

One of the things we uncovered in this year's study was that advice users didn't always feel their adviser spent time on the most important things, with too much time allocated to investment management.

So here's the opportunity: Only four in 10 millionaire advice-users reported that their financial adviser proactively reached out to them regarding the impact of tax reform.

When advisers did engage with clients around taxes, investors recognized the value of the service: 63% of millionaires with an adviser felt that their adviser added value by helping them deal with the latest tax reforms. We believe that engaging current clients around this topic could be a quick win for advisers.

(More: More about death and taxes)

Prospects, Too

Millionaire investors are often self-directed. But when it came to tax planning, even millionaires who previously declined advice said they would be willing to pay for it. In fact, half of millionaires without advisers are willing to pay more for an adviser who could help them take advantage of the recent tax reform and help reduce their taxes. This presents a huge opportunity for potential inroads with investors who were previously self-directed.

Reassess Your Value Proposition

Financial advisers wear a lot of hats. Not only are they advising clients, they're marketing their firm to prospects. Through our study we know that millionaire investors are looking for assistance with tax planning. If that's something you can offer, why not consider weaving that into your firm's value proposition?

It would likely be well-received: 10% of millionaire non-advice users listed help navigating tax reform as a top reason to select a financial adviser. You can get creative with your problem-solving, too. If you don't have the in-house capabilities, consider partnering with a consultant who's well-versed in the area.

Advisers are challenged to deliver value in the most impactful areas, but those areas evolve regularly and advisers may not be keeping up with their changing needs.

Taking a step back to assess what your firm provides versus what investors are looking for can help solidify relationships with current clients, and may even make your firm more attractive to the untapped market of non-advice users.

(More: The new knights of the roundtable)

David Canter is executive vice president and head of Fidelity's RIA segment, Fidelity Clearing & Custody Solutions.


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