Optcapital’s deferral program for attorneys’ fees enables each attorney to designate a financial advisor to manage the investment of the deferred fees. Optcapital does not provide investment advice or investment management, so we engage third party advisors. As a result, we work with numerous firms, including wire houses, banks, regional brokers and independents.
When an attorney designates a Financial Advisor, Optcapital will open a managed account with the FA. The deferred fees will be deposited into that account, and the FA will serve as both custodian and investment manager with discretionary authority over the account.
We work with the FA to establish an investment policy for the managed account. The investment objectives and risk tolerances are based on those of our client. The account can be invested in most any type of security (stocks, bonds, mutual funds, ETFs) consistent with the investment policy statement.
Deferral Accounts have several advantages for both the attorney and the Financial Advisors.
- Legal fees are invested on a pre-tax basis, increasing the amount of investable income.
- The investments are tax-deferred, meaning that taxes are not paid on annual gains.
- The combination of pre-tax and tax-deferred investing is the most efficient way to invest.
- Unlike a traditional investment account, a deferral account can hold investments that generate active income, without generating taxable gains each year.
- Deferred investments tend to be long-term investments, allowing for pre-tax and tax-deferred compounding.
If you work with attorneys who receive contingent fees (typically plaintiffs’ firms) and are interested in more efficient tax management and more efficient investing, please contact us at firstname.lastname@example.org to see how we can partner to serve your client.