The Wall Street Journal-20080206-Financial Advisers Prep For Rebates- Tax Credits

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Financial Advisers Prep For Rebates, Tax Credits

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As an economic-stimulus plan with rebates for millions of Americans wends its way through Congress, some financial advisers are making their own plans for communicating with clients.

Rebates and tax credits in the $146 billion bill approved by the House of Representatives last week are meant to spur spending and jump-start the sputtering U.S. economy.

Advisers, however, will suggest recipients use the money to pay down high-interest debt, build up emergency cash reserves and invest in a retirement or college savings account -- in that order.

Financial planners say they have received a smattering of rebate questions from clients so far. Some say they are tracking the bill's progress and will provide guidance to clients if and when legislation is passed.

Many investors who work with financial advisers, particularly those at large Wall Street firms, earn too much to qualify for rebates under the House bill, although those with children might be eligible. And the proposed rebate amounts -- $300 to $1,200 -- aren't large enough to have a significant effect on most investors' financial plans.

But events like the stimulus package create opportunities for advisers to reach out to clients and show they are on top of matters, says Chip Roame, managing principal of Tiburon Strategic Advisors, a financial-services research and consulting firm. For financial advisers seeking to build long-term relationships and assist with clients' wide-ranging needs, frequent contact is key.

"This is a chance to communicate with one's full client base," Mr. Roame says. He suggests sending a short email as soon as legislation is passed with the highlights and suggestions for using rebates.

That is what Rick DeChaineau, a certified financial planner at Secure Choice Financial Planning LLC in Tacoma, Wash., intends to do.

He plans to email details, once they become clear, to clients and the pecking order of saving priorities. He says most of his clients would likely qualify for a rebate.

Mr. DeChaineau says he will also encourage clients to spend a portion of their rebates on a treat such as a dinner out or night at the movies.

Similarly, Troy Von Haefen, a certified financial planner at Von Haefen Financial Management in Nashville, Tenn., says he will likely email clients if legislation is approved and emphasize that rebates are "a great opportunity" to accelerate financial plans.

Ginger Ewing, a senior financial adviser with Ameriprise Financial Inc. in St. Paul, Minn., estimates most of her clients would be eligible for a rebate. She meets with clients at the start of each year and says she expects to include rebates in planning discussions.

For relatively young clients with no debt, adequate cash reserves and time on their side, Ms. Ewing might suggest investing the money in the stock market. Contributing to an individual retirement account is another option, as is contributing to a charity. "If you're looking at this as free money, go do something special with it," she says.