Financial advisors are always seeking to connect on a personal level with their clients and to uncover shared interests and beliefs. While this isn't the only route to building a great advisor-client relationship, it can be a very effective building block.
So when David E. Zumbusch, CFP, realized how many of his clients shared his passion for hunting and other outdoors activities, he began to think about how to apply this to his business model. The result is Sportsmen Dream Financial, a specialized extension of Zumbusch's thriving practice in Buffalo, Minnesota.
"Hunting is a way of life for me and for many of my clients. A love of the outdoors and a respect for wildlife is one of the most important things I can pass along to my three sons, and that my clients can pass along to their families," said Zumbusch, who is a member of Ducks Unlimited, Safari Club International and the National Rifle Association.
The idea for Sportsmen Dream Financial came from Zumbusch's discussions over a dozen years in the planning business with clients who were outdoorsmen who owned land where they went hunting and fishing. "The problem that has been coming up is how do these clients keep that land in their family's hands for future generations?" said Zumbusch.
The answer has been conservation easements and, as a result, a new niche business was born.
A conservation easement is a commitment by a land owner to leave a piece of land in an undeveloped state in perpetuity. The donor of the land works with a recognized land trust organization that "receives" the gift of undeveloped property, and ensures that the property will remain undisturbed. More than 1,600 private land trusts are operating today, and they are facilitating easements on an estimated 2.5 million additional acres of land each year, according to the Land Trust Alliance.
"When I started reading about conservation easements, I immediately knew why this was great for my clients who fit a specific profile," said Zumbusch. "They could preserve the open land and maintain control over it while also creating a positive impact on their financial situation."
Conservation easements are very valuable estate planning tools because the easement reduces the assessed value of the land significantly. It is not uncommon for land that would be valued at $20,000 or more per acre by a developer to be valued at a few thousand dollars per acre after the easement is finalized. This reduction in land value is considered a charitable donation. For the donor, the conservation easement yields reduced property taxes, a smaller estate, and a charitable gift that can be deducted from income taxes.
Just as importantly, conservation easements are very flexible. Depending on how the conservation easement is structured, the donor can retain significant control over the use of the land, and even who has access to it. Basically, the land can remain the donor's property and for the exclusive use of his family and friends, while generating favorable tax treatment. All the donor has to do is abide by the rules he agreed to in the conservation easement document.
"This ability to retain ownership and control of the land is very appealing to my clients. I emphasize this point when discussing the possibilities with them," says Zumbusch. "I see a lot of potential in Minnesota, where my business is focused."
The Sportsmen Dream Financial business model enables Zumbusch to attract wealthy outdoorsmen who are land owners. He can develop comprehensive financial plans for them, while incorporating a conservation easement. Imagine a comprehensive wealth management process, shown as an org chart, but with an added box for a conservation easement.
To establish himself as an expert, Zumbusch developed a special report that explains how conservation easements work. He is now sharing the report with clients and prospective clients, as well as distributing it to CPAs and estate attorneys who might be working with land owners -- in other words, his target market. Zumbusch's goal is to have Sportsmen Dream Financial be the first thought that comes to people's minds when they think about wealth management for outdoorsmen.
To write the report, Zumbusch began by talking with his clients about being outdoorsmen, and why they want to preserve open land. He then moved into talking to representatives of land trusts, such as Ducks Unlimited, about how conservation easements actually work. Then he spoke to staff members of the Minnesota Department of Natural Resources, to get their perspective on the importance of preserving open spaces. Finally, he interviewed strategic partners (such as CPAs and attorneys) to get their thoughts and observations.
"Writing this report was very helpful on many levels. First, my clients opened up and talked with me about their love of the outdoors, and their concerns that their lifestyle is disappearing due to loss of open land, social pressure on hunting, and the younger generation's waning interest in outdoor pursuits. Second, the study got me talking to 'influentials' in the conservation easement field," he said. "If you're going to develop a niche, you really have to dive into it."
This summer, Zumbusch is working with his first client on an actual conservation easement. It involves about 200 acres, of which 40 acres of wetlands will be controlled by the easement. Zumbusch is not the only advisor in the situation, as the land trust organization and an estate planning attorney also are directly involved.
Actually, Zumbusch's timing probably couldn't be better. Late last year, the federal government changed the laws to make conservation easements even more attractive. The Pension Protection Act of 2006 eased the rules for using the charitable income tax deductions generated by conservation easements. Now, donors can take a deduction of up to 50 percent of their income in the first year (as compared to 30 percent previously), and they also can spread deductions over 15 years (as compared to five years previously). "There's a lot of financial flexibility under the new rules," said Zumbusch.
While Zumbusch has been a financial advisor for 12 years now -- first as a registered representative for seven years with American Express Financial Advisors then, ultimately, moving to independent broker-dealer Securities America and investment advisor Securities America Advisors -- he says this new brand identity and specialty focus has helped him build the business of his dreams. This martial arts practitioner and former U.S. Marine Corps sergeant also strongly supports the right to bear arms, a value that his ideal clients also tend to hold dear. The result of this new focus? Business is booming and Zumbusch has been invited to Securities America's Masters Forum the past two years.
Marie Swift is the president of Impact Communications, a marketing and communications firm for independent advisors; see www.impactcommunications.org.