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Deepen Relationships With 3 Additional Accounts

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What You Need to Know

  • Donor-advised funds let clients book a donation for tax purposes and distribute the money to charity later.
  • Clients over 50 can make large catch-up contributions to a retirement account.
  • Although the money deposited in a 529 plan isn’t a tax deduction, it grows in that lower tax environment.

Your business grows in two ways. You either add more clients with fresh assets or deepen current relationships by bringing in added assets. Sometimes we think “I have all their money.” Here are three ways to deepen relationships by opening additional accounts for current clients. In each case, the client benefits.

1. The donor-advised fund.

Americans are charitable. We give lots of money to worthy causes. There are often tax benefits. Usually this is a reactive process: The charity makes an appeal, and your client responds. Some years are better than others. Here’s how you can help your client’s situation.

How it works: The donor-advised fund is an account structure offered by many major financial services firms through a framework that has the status of a charitable organization. Your client assigns cash or securities to the donor-advised fund. This becomes a charitable contribution for tax purposes. When the client wants to make a gift to a charity, they give instructions and the gift is made. Money can stay in the account in the meantime, being managed as an investment account.

How the client benefits: They can give larger amounts of money even though their favorite charities haven’t made a large request. They can deposit appreciated stock, getting a deduction for the entire amount, without capital gains tax liability. The funds in the account can be actively managed like their other securities accounts. They may even be able to name the account!

2. Retirement accounts.

Your client has one! They talk about their 401(k) all the time. Maybe they have an orphaned IRA somewhere. Has your client been making regular contributions? Maybe not. Are they over age 50? This could provide an advantage. 

How it works: Your client needs to feel that money growing in a tax-deferred environment is more advantageous than money growing in an environment where taxes are paid annually. Your client ideally wants to reduce their taxable income. Retirement plan contributions play a role. If they are over 50 and have missed making contributions, they have the opportunity to make large catch-up contributions. This creates a pool of money that can ideally be managed for the long term.

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How the client benefits: Retirement plan contributions reduce their level of taxable income. They might be behind in making contributions while not having adequate savings for retirement. That’s the conventional approach. Your client might have a side job. They might run an online store on eBay. They might do consulting work. If they are producing taxable income, they are likely allowed to set up a retirement plan aligned to that income stream, reducing their overall taxable income.

3. college savings plans.

Your client has lots of money. They want to provide for their grandchildren’s college education. Children can have other educational expenses, and they are concerned the parents might immediately use the funds for private high school tuition, not holding the funds until the grandchild starts college. 

How it works: Generally speaking, clients can set up a 529 plan for a grandchild. They are listed on the account. Although the money they deposit isn’t a tax deduction, it grows in that lower tax environment. There’s a drawback because college savings plans owned by someone other than the student or the parent can affect financial aid. Check it out.

How the client benefits: If your client wants to pay for college and is concerned the funds might be used for different education expenses beforehand, this gives them a degree of comfort.

There are many ways you can deepen client relationships. These are three good starting points for discussion.


Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor,” is available on Amazon.