The financial advisory business has historically been a very profitable one. Managing money for investors—especially wealthy investors—has consistently been financially rewarding for advisors and their firms. While the financial advisory business has always been good, strong indications show that the potential for success will increase—possibly exponentially—under a Trump administration. His choices for cabinet members and his proposed policies are going to very likely create an environment where financial advisors concentrating on building a clientele of affluent investors will be able to excel.

For those financial advisors who are well positioned, have a solid business model, and are highly systematic when it comes to business development, the creation of meaningfully more private wealth under a Trump administration translates into more assets under management, more fees, more profit and more income.

More Private Wealth
Forget the Illuminati or the Templars, the Trump cabinet is a clear example of a plutocracy. There have never been as many billionaires or as wealthy a cabinet in history. And Trump is a billionaire. These individuals are intent in carrying out Trump’s policies, which entail eliminating many regulations.

When a large percentage of these regulations are eliminated, it will likely enable small and midsize businesses to be more successful. This, in turn, will likely make the owners of these businesses more affluent. The proposed cabinet appointees would also give support to a booming wealth management business. Given their backgrounds and personal wealth, they are likely to be positively disposed to the financial services industry.

The biggest and most immediate driver of greater private wealth will come from the tax cuts. The proposed income tax cuts on the wealthy will put more money into their hands. A percentage of these funds will likely end up being managed by talented financial advisors. As most self-made millionaires are business owners, lowering the corporate tax rates will also give them additional funds. While some business owners will end up reinvesting these monies in the firms, it is highly probable that many other successful business owners will hand their tax savings over to financial advisors to invest.

If the estate tax is eliminated, then a cohort of ultra-wealthy families will likely be on course to creating financial dynasties. Capable financial advisors can help them navigate this process in many ways. For those less affluent families, the abolition of the estate tax will translate into significant investment management opportunities for financial advisors.

More Competition
With a booming financial advisory business focusing on wealthy investors, coupled with changes in the tax code, one of the results is going to be a much more competitive environment for investable assets from the wealthy. Consider the elimination of the estate tax. Let us also presume the gift tax is eliminated. In this scenario, high-end life insurance agents (defined as those who provide life insurance to the wealthy to address estate taxes) find their services to be superfluous.

The arguments that federal estate taxes will reappear when the Democrats are back in power and that the wealthy can get lower rates now because they are in better health is probably accurate. Then there are always state estate taxes. However, from the perspectives of the wealthy—especially the ultra-wealthy—these and similar arguments are pretty much vaporous. Consequently, a large percentage of the wealthy will not be purchasing life insurance to pay estate taxes, or if they do, it will be at considerably lower levels, and this will have a dramatic impact on the production, profits and income of high-end life insurance agents.

By becoming financial advisors, these high-end life insurance agents will unwind or restructure the—now unneeded—life insurance policies of their high-net-worth clients, which were purchased to pay estate taxes. At the same time, a substantial number of them will embrace investment management, if they had not already done so.

With more competition, the ability of financial advisors to excel and capture a meaningful share of a larger pie of investable assets is going to rest heavily on their business development proficiencies. Not to minimize money management skills, but investment management is becoming increasingly commoditized.

The Need To Stand Out From The Crowd
With the opportunities to seriously boost assets under management, and consequently their own incomes, most financial advisors will get a limited boost from the Trump administration. With the wealthy accumulating more and becoming more numerous, and with more financial advisors “chasing” them, we are likely to see a relatively small cohort of advisors become extremely personally wealthy. Their practices are going to do amazingly well, and they will become quite affluent in their own right.

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