How You Can Cultivate Your Own High-Net-Worth Clients

15th Oct 2015

lots of green money

Financial Advisors: Are you overlooking high-income clients because they are not yet high net worth (HNW)? Many advisors seek clients with high net worth, but it’s the high-income clients you can help most by growing them into high net worth (thanks, of course, to your financial planning) . High-income independent professionals and consultants, self-employed individuals and small business owners might have only small accounts with you now, but imagine the potential for these folks. Large annual contributions to a defined benefit plan —recurring new assets that you manage — could develop them into substantial relationships for you and high new worth for them. Check out the impact the right retirement plan can make:



One of our typical clients would be a 56-year-old university professor who has side income of $150,000 from consulting, board fees and speeches (after paying self-employment taxes). The professor plans to retire at 62 and wants to reduce taxes on her side income. By contributing $120,000 annually into a defined benefit plan for six years, she would save $45,600 in current year taxes, assuming a tax rate of 38%, and accumulate $856,400 in the defined benefit plan.

Who’s eligible for defined benefit plans? We’ve established micro plans for property managers, lobbyists, wholesalers, engineers, truckers, physicians and consultants who have high-earned income that was not covered by an employer-sponsored retirement plan.

In the past three years, tax rates for high income clients on earnings and investments have increased while deductions have decreased. Which clients can you help hold onto more of their earnings by lowering their annual tax liability?

Here are three questions to ask your clients to get the conversation started:
1. Would you be interested in saving more for retirement if you could take a larger tax deduction?
2. Do you have W-2 or 1099 income in 2015 that is not currently covered by an employer-sponsored retirement plan?
3. Do you plan to work at least another 3-5 years?

What are your thoughts on defined benefit plans for tax savings?

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