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Tax Efficiency is a Big Factor in How This Top Advisor Allocates Client Assets

By Rita Raagas De Ramos November 5, 2018

This is the final part of a six-part series probing the concerns of American investors, as expressed to top financial advisors.

Brian Vendig, Farmington, Conn.-based president and managing executive of MJP Wealth Advisors, says investors should pay more attention to tax efficiency because it can have a significant impact on one’s financial security.

“It’s inherent in how we allocate assets for clients. So we’ll have more tax inefficient investment options in a client’s tax-deferred account and we’ll have more tax efficient investment solutions in a taxable account,” Vendig says.

“So it’s really more than just making sure that there’s a tax efficient component as part of the portfolio, but also thinking about taxes overall for our clients,” he adds.

When Vendig creates a financial plan for a client, he says he also wants to understand certain short-term elements.

“What is their income? What are their expenses today? What are some of their longer-term goals or where they see income or expense in the future? We want to get an understanding of the family dynamic. Is there an estate plan? Is there inheritance down the road or not? What are, of course, some of their primary objectives of what they want to achieve over time?” he says. “Having a view on how tax plays into that.”

Brian Vendig

Here are the top three financial security-related questions Vendig is asked by his clients, and how he answers them:

#1 How do we ensure we are generating enough income from the investment portfolio in a low interest rate environment?

“I educate clients of risk-reward in generating income from various assets classes over stock, bonds and alternative investments and clarify the sensitivity of these choices balanced against the potential for future rising interest rates.”

#2 How do we manage the risk of elder care issues for our household?

“I discuss costs of various types of care across various geographies, review the risk to the financial plan if minor, medium or acute care needs arise and the impact on the wealth plan. I educate clients regarding different types of long-term care insurance that exists in the marketplace, discuss family dynamics to support care needs between clients and adult children and titling of assets, etc.”

#3 How do the changes in the tax code relate to our estate plan at the federal and state level?

“I review the existing estate plan and educate clients of state and federal tax levels as it relates to the titling of household assets (liquid and illiquid) … to mitigate estate tax consequences versus planning techniques and charitable gifting strategies as well, depending on the clients’ objectives.”

Vendig has been an advisor since 2011. MJP Wealth Advisors, founded in 1981, says it has around $450 million in client assets.

Read Ric Edelman’s interview here, Ken Fisher’s here, Nick Strain’s here, Michael Weissman’s here and Terri Munro’s here.