As the fourth quarter approaches, financial professionals are urging their clients to move past routine planning and focus on decisions that carry hard deadlines. According to Jeffrey Fratarcangeli, founder and CEO of Fratarcangeli Wealth Management, the biggest risk during this time of year is a breakdown in communication between clients and the professionals managing their money.
Here are three key considerations Fratarcangeli emphasizes for his clients ahead of Q4.
Coordination between your advisor and tax professional is non-negotiable
Fratarcangeli says clients often experience financial events unrelated to their investment accounts, like a home sale or a Restricted Stock Unit vesting, that materially affect their tax picture. Because those events happen outside the accounts he manages, his firm won’t know about them unless the client says something.
“It is a reality that events may occur for clients that their wealth management team will not automatically be privy to,” he explained. “We can help mitigate that communication gap by sharing what we do know with our clients and their tax professionals, whether that’s their realized or unrealized gains, losses, interest or dividends.”
That communication serves two purposes, he explained: making sure clients aren’t caught needing cash unexpectedly, and identifying whether anything can be done proactively to offset tax exposure before December 31.
The window leading up to December 31 will close quickly. Tax-loss harvesting, unlike many planning strategies, can’t be revisited after the calendar turns.
Election-year volatility cuts both ways
This year’s Q4 carries an added layer of uncertainty tied to the midterm elections. Fratarcangeli says that historically, the market during this stretch of the calendar tends to run more volatile due to uncertainty around policy outcomes. But he’s quick to note the other side of that history.
“Post-election, the odds of the market going up are better than 90%, and the percentage of gain historically is far greater than the norm,” he explained.
The goal leading up to midterm elections, according to Fratarcangeli, is to make sure clients are positioned to benefit from that historical pattern without compromising their near-term cash flow needs. With that positioning in place, predicting the outcomes of elections becomes irrelevant.
“Thanks to the midterm elections, my antennas are up more now than historically coming into the fourth quarter,” he said. “Because of that, my team and I will make sure that we are proactive in talking to our clients about their discretionary income, as well as their cash flow needs that may preclude us from investing dollars we thought we could.”
Deductible spending applies to businesses and individuals alike
Fratarcangeli points to a shift in how capital expenditures are treated following last year’s tax legislation, commonly referred to as the “Big Beautiful Bill.” In some cases, companies can now deduct the full cost immediately instead of spreading the deduction over several years.
“It is similar to receiving a tax break on money you were already planning to spend,” Fratarcangeli explained. “Instead of sending that money to the government, you can keep it on your balance sheet and put it to work.”
He said the change can benefit businesses regardless of whether they are structured as pass-through entities or traditional corporations.
For more insight from Jeffrey Fratarcangeli, visit www.fratarcangeliwealth.com.
