6 Tax Planning Strategies that Help Financial Advisors Create More Revenue

As an advisor, expanding your service offerings to include comprehensive tax planning can significantly boost revenue while providing immense value to clients. We will show you how to leverage tax planning expertise available through a Virtual Family Office (VFO) model, where you can offer sophisticated tax strategies that set you apart from the competition. This VFO model gives you a VFO liaison (offered through the Catalyst program here) that can help you understand how and when to bring in various specialists for your clients. 

Partnering with a Virtual Family Office allows you to share in the revenue with any engagements that you bring. Since we recommend connecting to tax planning specialists inside of our VFO,  you don’t need to know for yourself all the details of advanced tax planning strategies. However, it’s good to be generally aware of them so you know which clients might benefit. 

Through a VFO liaison, here are 6 tax planning strategies you might consider connecting a client to a specialist with.

1. Cost Segregation Studies

Cost segregation is a powerful tax planning strategy that can accelerate depreciation deductions for commercial real estate owners, resulting in significant tax savings. This approach involves analyzing and reclassifying components of a building from real property (39-year depreciation) to personal property or land improvements (5, 7, or 15-year depreciation). By front-loading depreciation deductions, property owners can substantially reduce their tax liability in the early years of ownership.

How it creates revenue:

• Charge a fee for coordinating the study
• Share in the fees generated by the cost segregation specialist
• Strengthen client relationships, leading to increased AUM and referrals

VFO Advantage: Partner with cost segregation experts to offer this specialized service without needing to become an expert yourself. The VFO model allows you to tap into the expertise of cost segregation professionals, ensuring your clients receive high-quality service while you focus on your core advisory role.

2. Research and Development (R&D) Tax Credits

R&D tax credits can provide substantial tax savings for businesses engaged in qualifying research activities, even in industries not traditionally associated with R&D. These credits are designed to incentivize innovation and can apply to activities such as developing new products, improving existing ones, or enhancing manufacturing processes. Many businesses overlook this opportunity, making it a valuable area for advisors to explore with their clients.

How it creates revenue:

• Charge a fee for identifying R&D credit opportunities
• Share in the fees generated by R&D tax credit specialists
• Attract business owner clients with this valuable service

VFO Advantage: Collaborate with R&D tax credit experts to help clients in various industries identify and claim these often-overlooked credits. The VFO model provides access to specialists who stay current with the latest R&D tax credit regulations and opportunities across different sectors.

3. Native American Tax Credits

Native American Tax Credits, also known as Indian Employment Credits or Tribal Economic Development Bonds, offer significant tax incentives for businesses that employ Native Americans or invest in tribal lands. These credits are designed to stimulate economic growth and job creation in Native American communities. For businesses operating on or near tribal lands, or those employing enrolled tribal members, these credits can provide substantial tax savings while supporting underserved communities.

How it creates revenue:

• Charge fees for identifying eligibility and structuring business operations to maximize credit benefits
• Share in the fees generated by tax specialists who help claim and document these credits
• Attract business owner clients looking for tax-efficient expansion or employment strategies

VFO Advantage: Partner with tax specialists who have expertise in Native American tax law and economic development programs. The VFO model allows you to tap into the knowledge of professionals who understand the complexities of tribal sovereignty, federal Indian law, and the specific requirements for these tax credits. This ensures your clients receive expert guidance on leveraging these credits while maintaining compliance with all relevant regulations.

4. Roth Conversion Strategies

Roth conversion strategies involve systematically converting traditional IRA or 401(k) assets to Roth accounts to optimize long-term tax benefits. This can be particularly valuable for clients who expect to be in a higher tax bracket in retirement or who want to leave tax-free assets to their heirs.

How it creates revenue:

• Charge planning fees for developing multi-year Roth conversion strategies
• Increase AUM by managing both traditional and Roth accounts
• Attract clients nearing retirement or focused on legacy planning

VFO Advantage: Work with retirement planning specialists and tax experts to develop sophisticated Roth conversion strategies. The VFO model allows you to leverage expertise in areas such as tax bracket management, Required Minimum Distribution (RMD) planning, and estate planning to create comprehensive Roth conversion plans tailored to each client's unique situation.

5. Captive Insurance Strategies

Captive insurance allows businesses to create their own insurance company, potentially resulting in tax benefits and cost savings. This strategy can be particularly effective for businesses with unique risks that are difficult or expensive to insure through traditional means. Captive insurance can offer tax deductions for premiums paid, potential investment income from the captive's reserves, and more control over the claims process.

How it creates revenue:

• Earn fees for helping clients set up and manage captive insurance companies
• Share in ongoing management fees for the captive
• Attract business owner clients with this sophisticated risk management tool

VFO Advantage: Collaborate with captive insurance specialists to offer this complex strategy while ensuring compliance with evolving regulations. The VFO network can provide access to captive insurance experts, actuaries, and legal professionals specializing in this area.

6. Advanced Charitable Giving Strategies

Sophisticated charitable giving techniques, such as Charitable Remainder Trusts (CRTs) or Donor-Advised Funds (DAFs), can offer significant tax benefits for philanthropically-minded clients. These strategies allow clients to support causes they care about while also potentially reducing their tax burden, creating a win-win situation.

How it creates revenue:

• Charge fees for structuring and implementing charitable giving strategies
• Increase AUM by managing assets within CRTs or DAFs
• Strengthen relationships with high-net-worth clients, leading to referrals

VFO Advantage: Work with charitable giving experts to design and implement complex giving strategies tailored to each client's goals. The VFO model provides access to specialists in charitable tax law, trust administration, and philanthropic planning, ensuring your clients receive comprehensive guidance in this area.

Implementing These Strategies with Catalyst

Implementing these advanced tax planning strategies can significantly enhance your revenue potential, but it requires a depth of specialized knowledge and resources that may seem daunting to acquire on your own. This is where the Catalyst program by Elite Resource Team becomes an invaluable asset to your practice.

Catalyst offers a comprehensive solution designed to empower advisors like you to confidently expand into advanced tax planning. Through this innovative program, you gain access to a vast network of Virtual Family Office (VFO) specialists, each bringing their unique expertise in various tax planning areas. This allows you to offer sophisticated strategies to your clients without the need to become an expert in every field yourself.

But Catalyst goes beyond just providing access to experts. It offers a holistic approach to integrating these strategies into your practice, such as equipping you with ready-to-use marketing resources, making it easier to promote your expanded tax planning services to potential clients. Perhaps one of the most valuable aspects of the program is the collaborative community it fosters. As a Catalyst member, you'll have the opportunity to connect with fellow advisors, sharing insights, best practices, and experiences in implementing these strategies.

By leveraging the comprehensive resources and support offered through Catalyst, you can confidently expand your expertise and service offerings, setting your practice apart in the competitive landscape of advisory services!