Journal of Financial Planning: August 2018
Evan T. Beach, CFP®, AWMA®, is a wealth manager with Campbell Wealth Management in Alexandria, Va., and a Kiplinger and Credit.com columnist who has also been published on Yahoo Finance, CNBC, TheStreet.com, Bloomberg, and U.S. News and World Report.
Since my sister and newest nephew live in Austin, Texas, our family decided to break with tradition and celebrate last Thanksgiving down there. That was just after the House version of the Tax Cuts and Jobs Act (TCJA) was released and immediately before the tax workshops we hold with a local CPA firm at the end of every year.
I decided to further embrace change and try out United’s “basic economy” seats to save on very expensive holiday airfare. That was a mistake. On my flight home I was in the middle seat of the last row, between two large men, reading the House bill. The memory of those torturous four hours faded the next evening as I greeted a group of 80 prospects and clients who turned out to hear what the tax bill entailed and the likely planning strategies that would emerge. Since then, I have taught six more sessions, all with similar attendance and all with very little capital outlay.
Too often in our business, we complain about the obligation that change brings. We would be better served to get excited about the opportunity it presents.
What Is It?
The TCJA is the biggest tax overhaul since the mid-80s. There is plenty of new client opportunity to be had, for those who are willing to put in the work.
The first step is to learn the new rules. This doesn’t mean you have to read the 1,101-page bill, but you have to at least know the major changes and how they impact your client demographic. I believe that you cannot be a credible wealth manager or financial planner without a good understanding of taxes. Almost every decision you make as a planner will show up on a 1040 at one point or another and have an impact on the bottom line. Consider this an excuse to close your tax-knowledge gap.
In my years training advisers, I could always find at least one person reading because he was too scared to pick up the phone and prospect. This is the same situation. Don’t use your extra homework as an excuse to avoid revenue-generating activity. Read the Kitces summary at kitces.com and then get to work!
The TCJA expands the standard deduction and consolidates Schedule A. Those who will get stung worst—or benefit most—are now the target demographic of your 2018 marketing campaigns.
What Should I Be Doing?
According to Charity Navigator, 31 percent of charitable contributions are made in December. Now, due to TCJA, less than 10 percent of individuals are expected to itemize deductions, so less than 10 percent of taxpayers will see any Schedule A tax benefit to giving.
Likely somewhere in your client base is a higher-up, or better yet, a development director, for a non-profit. The latter will probably struggle to hit this year’s goals, so help her out. Tell her donors about viable post-TCJA donation options: charitable lumping, charitable remainder trusts, qualified charitable distributions, and gifting of appreciated stock. Educating her donors is mutually beneficial.
One way to spread this message is with co-branded education sent in her non-profit’s newsletter or to its email list. This year, at tax time, we offered to co-brand a summary of small business retirement plans for accounting firms. Same idea. One problem: there is no lead capture for you, unless they call in. The better opportunities are speaking engagements in front of the non-profit’s donors. Remember, educating them is a benefit, so you shouldn’t be afraid to ask. Start with non-profits that you have a connection to, and then have them introduce you to others.
The only people getting more tax questions than you are CPAs. Imagine being able to answer the same question you have gotten from 20 clients, at one time, in a group setting. I teach 15 to 20 CPE classes per year on various retirement planning topics. As a result, I have an extensive network of CPAs in the D.C. metro area, and yet, I always had trouble getting traction on center-of-influence referrals.
My first breakthrough came when I started holding joint events with firms whose clients overlap with mine. We run six joint events per year with a tax topic and retirement topic that will interest both sets of clients. The classes that focused on the implications of the TCJA not only allowed both firms to answer the questions they were already getting, but they exposed both firms to the other’s clients.
You can spend days and even weeks creating content that you think would work well to promote your new tax expertise. But, don’t create classes or material without attendees.
Initially, I put together a list of topics and descriptions I thought would draw well based on the current environment. After an organization said yes, I would create the class they wanted; never beforehand. A few topics had no takers. Fortunately, I didn’t waste the time making the actual course.
The most recent course on Social Security and tax planning under the new legislation had about 60 attendees at each class. Why? The topic is timely and it impacts everyone.
Think about who you work with and how the new tax law impacts them. Your classes should attract those people. If you’re working with ultra-high-net-worth clients, try trust planning strategies under the new tax law. For millennials, try how the new tax laws impact home ownership; for both Gen X and Gen Y, new education funding strategies under the Tax Cuts and Jobs Act. You get the picture.
The Future of Marketing Is Digital
Over the last three years, our direct mail campaigns have generated fewer and fewer responses. If you’re ahead of the pack and have already created content around the TCJA, this is a great opportunity to plug into the Facebook marketing machine. I believe that as consumers become more educated, the value of your leads list will grow exponentially. Prospects’ decision-making has slowed, often as a result of information overload, so you will have to catch them around significant financial events. You can do that using drip marketing lists through software such as Infusionsoft. And how do you build your list? Facebook.
Facebook ads are cheap. Hiring people to build your list and fill events is not. Here’s a beginner’s guide: the content you have written/recorded is your “lead magnet.” Your Facebook ads can be hyper-targeted to your ideal client. Advertise that lead magnet to those profiles. For folks to view your content, they must click on a link that brings them to a landing page that has a “lead capture” to get their name and email address.
The mistake a lot of people make, once they have those addresses, is reaching out to set an appointment. Baby steps are often more effective. Invite the prospect to a related webinar with a calendar link at the end to set up a phone call. It may seem like a lot of steps just to end up on a phone call, but this is where we are headed. Don’t get left behind.
The Clock Is Ticking
For years we heard that Congress was going to get rid of Social Security’s “file and suspend” and “restricted application.” Congress finally did so via the Bipartisan Budget Act of 2015. There was a six-month grace period and subsequent race to SSA offices to file and suspend benefits. During that time, we ran about a dozen Social Security classes, and that brought two benefits. First, we became experts in both the old and new rules, which continues to pay dividends. Second, we brought on several million dollars in new assets from clients who, once they were forced to make a Social Security decision, reevaluated their entire situation.
The Tax Cuts and Jobs Act offers that same opportunity from now until April 15, 2019. Your clients need the education. You need the assets. Get to it!