A financial sales software firm predicts next year will be exceptionally busy for financial advisors.
Impact Technologies Group Inc., Charlotte, N.C., says expected federal tax reform, changes to the estate taxes and the first wave of baby boomer retirements will have significant impact on how advisors handle their clients’ financial plans.
Impact says changes in the tax code to reform or repeal the estate tax will have the most impact. Expected new retirement savings options will likely have a significant effect on how Americans plan for their future.
“There may be sweeping changes to retirement accumulation options, which may ultimately result in more ways to save for retirement,” says Maxey Sanderson, vice president of product development for Impact. “This will have financial planners busy for some time as they reeducate clients and modify their clients’ investment portfolios.”
Impact foresees increased activity in estate planning, too. Many individuals who have deferred planning waiting to see if there would be reform, according to Sanderson.
He sees a good chance that Congress will grant a large exemption from estate taxes, probably $5 million, and lower estate tax rates, probably 15% to 20%.
“Repeal would result in a similar amount of tax, but it would be as capital gains tax when the heirs sold the inherited property instead of when they inherited it, with a large exclusion for the spouse and family,” Sanderson says.
Kevin Clay, president of Impact, says advisors also need to put more emphasis on developing boomer post-retirement plans.
“Advisors must take action on distribution planning if they plan to capitalize on this market opportunity that will last for the next 10 years,” Clay says.