4 Recommendations for Advisors to Give Their Clients Now

Republicans will take control of the presidency, the Senate, and the House on Jan. 20, 2025. With one party at the top of all three branches of government, we can assume that changes to tax laws and the economy are coming in 2025. While nothing is certain, here are some steps clients can take before year-end to potentially put themselves in a better financial position:

Recommendation 1: Accelerate Some Purchases

President-elect Donald Trump is promising to increase tariffs on imports. If he does, there’s a good chance that many consumer products will be more expensive, especially products that contain imported parts. Therefore, if clients are in the market for any of the following, they should consider making these big purchases sooner rather than later:

• Major household appliances
• Laptops and tablets
• Video game consoles
• Smartphones
• E-bikes
• Cars and motorcycles
• Furniture

Recommendation 2: Don’t Prepay Property Tax or State Taxes

The current tax law limits the state and local tax deduction to $10,000. If you are subject to that limit, it won’t do you any good to pay the second half of your property taxes or your fourth-quarter state estimate by Dec. 31. So, wait! It’s possible that this limit won’t apply in 2025. Trump has pledged to eliminate the SALT cap entirely. Whether it’s eliminated, relaxed, or unchanged, you’re best off waiting to pay taxes until next year.

Recommendation 3: Don’t Prepay Advisory Fees

Investment advisor fees are not deductible because the Tax Cuts and Jobs Act eliminated miscellaneous deductions. According to Kitces.com’s Ben Henry-Moreland, “the advisory industry has lobbied lawmakers to bring back … the deduction for investment-related fees.” Although advisory fees are not guaranteed to be deductible in 2025, clients have a zero chance in 2024. So, advisors should ask clients if they should hold off on debiting their fourth-quarter fees until January.

Recommendation 4: Consider Increasing Cash Cushion—Especially for Retirees

Retired clients should be maintaining a cash reserve of three to six months’ worth of living expenses. I’m not a fan of market-timing, but actions by the new administration and Congress could lead to market volatility. Rather than being concerned about having to replenish cash during a downturn, clients should consider increasing their cash cushion to six to 12 months of living expenses.

Please note that this article is not intended to be tax advice. And again, the future is unknown, but it’s better to be prepared for potential changes before they happen than to wait until after they occur.