3 things financial advisors should watch for as we near the end of 2024

The fourth quarter presents an opportunity for advisors to conduct proactive discussions with clients and address their own advanced business planning. This year, however, has the potential to be especially impactful for advisors, with several major changes and opportunities on the horizon. From anticipated tax law changes, to continued easing of interest rates and the ongoing need to engage the next generation, advisors need to be proactive in how they approach these developments. Here’s a look at three key items we are watching alongside our advisor partners as we prepare to enter 2025.

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The presidential election and the impact on taxes. With significant tax changes on the horizon, our team has coined 2025 as the "Super Bowl of Taxes." The expiration of the Trump-era tax cuts looms large, with the changes from 2018 set to expire and impact nearly all Americans with tax bracket adjustments, changes to the standard deduction and the elimination of other tax breaks. These shifts will affect your clients, in some cases significantly, and will particularly influence income and estate planning.

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One key concern is the sunsetting of the current estate tax exemption at the end of 2025, which will have a significant impact on wealth transfer strategies. It’s something our team has spoken about extensively with our advisors partners, as well as with the media (see here for a recent post we did on the topic).

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Advisors need to start discussing these potential changes with clients now, exploring ways to position their financial plans to weather the changes. We recommend advisors initiate conversations with their clients about the forthcoming changes, as well as strategizing around creative, long-term solutions that can help clients mitigate tax exposure.

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The Federal Reserve’s posture on interest rates. Interest rates have been in focus throughout 2024, and the Federal Reserve’s pace of rate changes will continue to affect advisors and clients alike. With rates expected to continue to drop, the ripple effects will be felt across the economy..

We are watching the impact on two key areas: life insurance and annuities. Life insurance remains an important strategy for wealth preservation, tax-efficient growth, and legacy planning, and lower interest rates may lead to adjustments in life insurance pricing. There are solid solutions for investors. For example, indexed Universal Life (IUL) policies provide clients with market-linked growth potential while protecting their assets from losses, even when interest rates are volatile.

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On the annuity front, clients holding older annuities may still have a window to take advantage of today’s relatively higher interest rates compared to previous years—but they need to act quickly. Replacing outdated products with newer ones could lock in better rates and provide enhanced features. Even as rates stabilize, annuities remain a reliable solution for securing guaranteed lifetime income and protecting against market risks, offering clients peace of mind, especially during retirement.

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The near-term opportunity to reach the next generation. As the holiday season approaches, advisors have a timely opportunity to engage clients and their children in meaningful conversations about the family’s finances. The end of the year is often a time when families come together, making it an ideal period to facilitate discussions on sensitive financial topics such as estate planning, long-term care, and inheritance.

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These conversations can be difficult, as many clients may be reluctant to broach financial topics with family members. However, ignoring or delaying important financial conversations can have negative long-term consequences for families, especially when it comes to protecting wealth and ensuring a seamless transfer of assets. Advisors play an important role in guiding these discussions, helping clients address both emotional and practical concerns. By easing into the conversation and addressing topics like healthcare planning and family debt, you can set the stage for a smoother wealth transfer process and help clients preserve their family’s financial legacy.

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As we head into 2025, financial advisors are navigating a rapidly changing landscape, but by staying proactive and working closely with clients, you can help them make informed decisions that safeguard their financial futures. Remember, you don’t have to sort through these challenges alone. We invite our partners to lean on us to guide them through these scenarios and create opportunities for their clients.