What do you love to do in the summer? Where do you enjoy spending time during the hot and beautiful endless summer days? What picture do you get in your mind when I say the word summer?
Here in Wisconsin, we joke that we have four seasons: almost winter, winter, still winter and road construction. In Badger land, we love our summers! However, during the summer, clients, prospects, referrals, business owners and professionals all want to be outside to enjoy the blue skies and warm sunshine, not to come into our office and talk business.
During these types of seasons, I have thought up some tips to help you be at the top of your game even when people would rather be fishing or enjoy beach time on a nearby river, lake or ocean. Let's face it: You are probably no competition to soaking up the sun's rays and enjoying the green, green grass of home.
Build a list of your current clients who need an update of their current situation. During these times of economic uncertainty, considering alternative investments with inherent guarantees may be a smart and safe way to diversify your clients' investment portfolios. The list of alternative investments may include:
- Private Real Estate Investment Trusts (REITs)
- Market Neutral Funds
- Balanced Funds
- Variable Annuities with Guaranteed Income Riders
- Investment Grade Life Insurance (for the pile of money your clients don't need to use to generate retirement income)
- Funds with high Bear Market Ratings (according to Morningstar, Inc.)
- Stocks with strong balance sheets, excess cash flow, low debt-to-equity ratios, high return on assets and consistent dividend growth
- Publically traded REITs (such as health care REITs)
- Gold stocks, mutual funds or exchange traded funds ETFs
- Other commodity or currency ETFs
Add to the list your clients' referrals and your self-referrals who may need to update their wills or trusts before the anticipated 2011 sunset provision in the estate tax code. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGRTTA) repealed estate taxes this year and without congressional legislation to continue the 2010 repeal, reversion to the 2002 rates may occur. The 2002 unified credit exemption equivalent amount was $1 million with a top estate tax rate of 50%.
Obviously, disclose that you are not an accountant or attorney, nor do you practice law. Tell them they need tax and legal help from licensed accountants and attorneys. What you are allowed to do is to help them with estate planning designs as an insurance professional. Creative planning can help your clients pay the taxes they owe, but not a penny more.
Consider recommending strategies that help clients move taxable assets to more tax-preferred environments. While you are at it, help clients consider ways to transfer ownership of assets, if appropriate, to the next generation using unified credit and annual exclusion exemptions.
Every year, clients can gift recipients $13,000 without filing a gift tax return. The annual gift tax exclusion for gifts to a noncitizen spouse is $134,000. The unified credit exemption equivalent is $1 million per spouse. Finally, your clients may use the estate tax installment election: $1.34 million subject to 2% interest on tax due to closely held business; above that, the tax is 45% of the applicable federal rate.1
During your slower months, ramp up your weekly proactive calling time and follow through consistently. As Benjamin Disraeli said, "Action may not always bring happiness, but there is no happiness without action."
Footnote:
1. DF Institute, Inc. 2010 Pocket Table, Kaplan Financial Education, La Crosse, Wis.
Brent Welch, CFP, ChFC, CLU, is founder and managing member of Welshire Capital, LLC. Reach him at www.welshirecapital.com.
