IMCA Publication Focuses on Wealth Transfer and Taxation

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New tax rates and new strategies covered in IMCA’s Investments & Wealth Monitor.

As professionals serving wealthy clients, it is imperative that we keep up with the changing investment landscape, especially when it comes to wealth transfer and taxation.

Top tax rates are on the rise and financial advisors need to consider tax-smart investment strategies to help investors maximize after-tax return, according to a recent article published by Investment Management Consultants Association® (IMCA®) in its bimonthly, peer-reviewed magazine, Investments & Wealth Monitor.

With the American Taxpayer Relief Act of 2012 raising the top rate on dividends and long-term capital gains, and the 2010 Affordable Care Act also adding a 3.8-percent Medicare surtax, tax-aware investing is more important than ever. The article, “Increased Tax Rates and Investment Strategy,” lays out a five-point planning strategy to help investors improve after-tax returns in response to increasing tax rates.

Authors Peter Melcher and Robert Keebler note that tax-aware investing is rapidly gaining momentum with the realization “that what counts is not what you earn, but what you keep after taxes.” The authors provide real-world examples of how advisors can implement strategies that increase investment in tax-favored assets, manage gains, losses, and tax brackets from year to year, execute asset allocation on an after-tax basis, and manage asset location.

Also in this issue:

  • David Loeper considers the cost of applying a single safe withdrawal rate (SWR) for all clients to follow. Rather than prescribing a rule of thumb guided by oversimplified success and failure rates, Mr. Loeper suggests an individualized, nuanced approach to retirement planning that balances emotion and reason. He suggests that advisors understand their clients’ common fears, balance context and relativity in communication, set expectations that retirement plans will need to change, determine the values that should trigger a change, and set ideal and acceptable goals, understanding in advance the relative priority among those goals. Click here for the article.
  • Michael Tanner, senior fellow at the Cato Institute, examines the relative returns of the current Social Security system versus a system that allows for some private investment. In his analysis, Mr. Tanner considers three possible portfolios for three hypothetical individuals earning a range of incomes: a high-risk/high-return portfolio consisting of 100 percent stocks, a medium-risk/medium-return portfolio made up of half stocks and half bonds, and a low-risk/low-return portfolio consisting entirely of bonds. Click here for the article.
  • Diane Doolin and Carol Sherman of the Institute for Preparing Heirs suggest that advisors need to broaden their role as trusted advisors in order to guide their clients through wealth transfers. They offer a list of 10 “knowledge checks” that should serve as a baseline for beginning a conversation with clients that focuses on preparing what is most precious to them—their children. Click here for the article.

“As professionals serving wealthy clients, it is imperative that we keep up with the changing investment landscape, especially when it comes to wealth transfer and taxation,” said David Koulish, CPWA®, CFP®, chair of the Investments & Wealth Monitor editorial advisory board. “This
issue of Investments &Wealth Monitor provides high-level advice and hands-on strategies to help advisors navigate the complicated world of wealth management.”

Click here to read the latest Investments & Wealth Monitor on IMCA’s website.

Established in 1985, IMCA is a nonprofit professional association and credentialing organization with more than 9,000 individual members. IMCA members collectively manage more than $1.9 trillion, providing investment consulting and wealth management services to individual and institutional clients. Since 1988, IMCA has offered the Certified Investment Management Analyst® (CIMA®) certification, which earned accreditation by the American National Standards Institute (ANSI) in April 2011, making it the first financial services credential in the United States to meet international standards (ISO 17024) for personnel certification. IMCA’s Certified Private Wealth Advisor® (CPWA®) certification is suited for wealth management professionals working with high-net-worth clients. In 2013, IMCA conferences and workshops hosted more than 4,000 attendees.

IMCA® and Investment Management Consultants Association® are registered trademarks of Investment Management Consultants Association Inc. CIMA®, Certified Investment Management Analyst®, CIMC®, CPWA®, and Certified Private Wealth Advisor® are registered certification marks of Investment Management Consultants Association Inc. Investment Management Consultants Association Inc. does not discriminate in educational opportunities or practices on the basis of race, color, religion, gender, national origin, age, disability, or any other characteristic protected by law.

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Ryan Hoffman
since: 05/2011
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