When wealth manager
The standard question yielded a less standard answer. Her grandfather, it turned out, was a Civil War general, and when she was in her 20s, he dictated his autobiography to her. Not knowing what to do with it, she stashed the manuscript in a shoebox in her closet for over 70 years.
Eureka! Wisda and his team at Summit Wealth Management, an RIA in
There’s more to financial planning advice than doing it by the numbers. It helps to think outside the “shoebox” and explore your clients’ assets for hidden value. But to get there, you need to explore.
“You need to go through a discovery process, taking a consultative approach, asking about their personal assets, not just their investment assets,” says Wisda. Uncovering previously unrecognized assets, he adds, “draws your clients closer to you.”
In this case, creating a foundation was a novel solution. The manuscript will be self-published through Amazon’s Kindle store and iTunes, and the foundation will honor her grandfather and develop other exhibits pertaining to the Civil War.
Says Wisda: “We could have taken the simple route and donated it to a museum, but that wouldn’t guarantee it would get published. By creating a foundation, her interests are maintained.”
USING GIFTS CREATIVELY
Another out-of-the-box strategy that might not be immediately obvious involves gifting.
Take the tax strategy devised by
As Woodward planner
The daughter, however, was in a much lower 15% bracket, and the client was holding appreciated stock that qualified for long term capital gains.
So rather than have the client use cash, which would have been subject to his ordinary income tax rate, “We suggested the client gift the appreciated stock to his daughter,” says Brown.
“Because the adult child was in the15 percent tax bracket and lives in a state with no income tax, the long-term capital gain on the stock was zero,” the planner says. “This strategy allowed the client to help pay down the loan while minimizing the tax consequences.”
SELLING UNUSED PROPERTY
The couple also owned a condominium in
The alternative approach that Ferrari suggested entailed selling a parcel of their unused property near
USING A BROKERAGE ACCOUNT AS COLLATERAL
Another creative stratagem was devised by
As outlined by
In the second case, Bofford relates, a client’s daughter was purchasing a new home and needed funds for the closing, but had yet to sell her current home in which she had her equity.
By using his brokerage account for collateral, this client was also able to loan the money to his daughter for the closing liquidating his brokerage account and triggering taxes. Once the sale closed on her original home, the daughter was able to pay off the loan balance.
“Both clients,” Bofford says, “appreciated that we were able to bring an out-of-the-box strategy to bear on their short-term cash flow needs.”
Is there an overriding lesson here? Yes, says Summit’s Wisda. “Advisors need to think about what business they’re in. Are they in the investment business; are they just financial planners? Or are they true wealth managers?” If the answer is the latter, he concludes, then they have to recognize that “Wealth management encompasses many different processes.”
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