Clients, Strategy & Tax
Series 65 Section III: who the client is, what they need, the strategies and styles that serve them, and the tax and estate rules that shape every recommendation.
29 terms in this unit.
Sole Proprietorship
A business owned by one person with no legal separation from the owner.
General Partnership
Co-owners share management and unlimited liability; income passes through.
Limited Liability Company (LLC)
Limited liability for owners with pass-through taxation by default.
C Corporation
A separate taxpayer - profits taxed at the corporate level, then again as dividends.
S Corporation
A corporation that passes income through to shareholders, avoiding double tax.
Trust & Estate Accounts
Accounts run by a fiduciary - a trustee or an executor - under a governing document.
Foundations & Charities
Tax-exempt organizations investing for a mission, often in perpetuity.
Client Profile & Data Gathering
The financial and nonfinancial facts every recommendation must rest on.
Investment Objectives
Preservation of capital, income, growth, growth and income, speculation.
Time Horizon
How long until the money is needed.
Behavioral Finance
The predictable ways psychology leads investors to depart from rational choices.
ESG & Values-Based Investing
Applying environmental, social, governance, or religious criteria to investments.
Social Security Benefits
Full retirement age is 67; claiming at 62 reduces benefits; waiting to 70 raises them.
Pension Payout Choices
Single life pays more; joint and survivor protects a spouse.
Strategic vs. Tactical Asset Allocation
Long-term policy weights versus short-term deviations from them.
Active vs. Passive Management
Trying to beat the market versus trying to match it.
Growth vs. Value Investing
Paying up for fast earners versus buying out-of-favor bargains.
Sector Rotation
Shifting among sectors to match the stage of the business cycle.
Protective Puts & Collars
Using options to limit downside on stock already owned.
High-Frequency Trading
Computer-driven trading in huge volume over tiny time frames.
Marginal vs. Effective Tax Rate
The rate on your next dollar versus the average rate on all your income.
Alternative Minimum Tax (AMT)
A parallel tax calculation that adds back certain preferences; you pay the higher.
Net Investment Income Tax (NIIT)
A 3.8% surtax on investment income for higher earners.
IRMAA (Medicare Income-Related Adjustment)
Higher Medicare premiums for higher-income beneficiaries.
Taxation of Entities & Pass-Throughs
C corps pay their own tax; REITs, MLPs, LLCs and S corps mostly pass income through.
Cost Basis Methods & Gifted Property
FIFO by default, specific identification to control gains; gifts carry over the donor's basis.
Annual Gift Tax Exclusion
$19,000 per recipient per year in 2026 without using any lifetime exemption.
Estate & Gift Tax Exemption (Unified Credit)
$15 million per person in 2026, shared between lifetime gifts and the estate.
Portability (DSUE)
A surviving spouse can use the deceased spouse's unused exemption.