Delaware Statutory Trust (DST) Consultant for Advisors
Carl E. Sera, CMT
May 16, 2023
Hi, I’m Tom, and I am a wealth manager with “I care about my client capital management,” I got on your calendar because one of my clients and a good friend is selling a property. They asked me to find out if there was a way to do it in a tax-efficient manner.
Sera Capital - Hi Tom, that’s good to hear. And the answer is, “of course, there is a way to sell in a tax-efficient manner,” and we specialize in the process. Over the last decade, we have worked with hundreds of advisors as 1031 advisors to accomplish just that outcome. There are lots of ways. But before we get into the weeds, how did you come across Sera Capital?
Tom – I was researching capital gains taxes and real estate, and I found your site informative. Still, I was particularly attracted to the fact that you work on a fee basis and act as a fiduciary. I liked the idea of partnering with someone with no conflict of interest.
Sera Capital – That sounds about right. A big chunk of our practice comes from partnering with other advisors that want to work with like-minded advisors. As pure fiduciaries, which means we never receive compensation from anyone other than the client, we help advisors help clients transition from owning real property or small businesses to owning predictable income-producing passive investments. The elimination of a conflict is, in our opinion, critical to a successful, confident solution.
Guess what, Tom? There are a few added benefits,
The first is that in many cases, your client will not only defer taxes but potentially eliminate them, and secondly,
Since you will be part of the process from day one and every step along the way, at some future point of your choosing, if you want, we can hand off the relationship as well as the assets to go right back under your custodian and supervision.
Tom – Sounds interesting. But how do I know if you are the right partner for me?
Sera Capital – That’s a great question, Tom, and we hear it every time we partner with an advisor. Our standard response is to do your due diligence by calling a number of our competitors or at least people that think they are our competitors. If you like, we can even give you the names of the other big players in the industry. You will find that our combination of low fees, no conflict of interest, product lineup, and expertise is unsurpassed in terms of an overall package. Furthermore, since our roots since 1990 are steeped in wealth management, we speak the same language you do.
Tom – So let me get this straight. I introduce you to my client, we speak to them together, you provide technical expertise to solve this particular problem, and then you exit based on my choosing.
Sera Capital – That’s right. It happens all the time, but guess what. We’ve learned that if a client has one property they are looking to sell, they typically have 4-5 other properties to sell and perhaps a small business. So, we develop a comprehensive exit strategy with your guidance, incorporating the entire portfolio solution. This includes our “what’s best” analysis of 1031 exchanges, 721 exchanges or UPREITS, IRS section 453 installment sales, both deferred and structured and Qualified Opportunity Zone funds. Our job is to educate you and your client so that whatever decision you make is informed, well thought out, and provides a long-term tax-advantaged solution.
Tom - What qualifications are necessary to become a Delaware Statutory Trust advisor?
Sera Capital - Delaware Statutory Trust (DST) advisors specialize in helping clients invest in DSTs. DSTs are a popular investment vehicle for many investors because they offer a way to invest in real estate without the hassles of property management. However, becoming a DST advisor takes work and requires a specific set of qualifications.
To become a DST advisor, one must deeply understand the real estate market and investment principles. This means a DST advisor must have a finance, real estate background or a related field. A bachelor's degree in finance or real estate is often a requirement, and some employers may also require a master's degree.
In addition to education, DST advisors must have experience in the industry. This includes a track record of successful investments in real estate and experience working with clients to help them achieve their investment goals. Some employers may require that DST advisors have a certain number of years of experience working in the industry before they are eligible to become an advisor.
Another qualification that is necessary for DST advisors is a securities license. DSTs are regulated by the Securities and Exchange Commission (SEC), and advisors must have the appropriate licenses to sell securities. The SEC recognizes several licenses, including the Series 7, Series 63, and Series 65 licenses. Sera Capital has 63 and 65 licenses. We are held to the fiduciary standard.
In addition to education, experience, and licensing, DST advisors must have excellent communication and interpersonal skills. They must be able to work closely with clients to understand their investments.
Tom - What are the responsibilities of a Delaware Statutory Trust advisor?
Sera Capital - As an investment professional, you may be familiar with Delaware Statutory Trusts (DSTs) as a popular option for real estate investment. However, you may need to be made aware of the specific responsibilities of a DST advisor.
First and foremost, a DST advisor is responsible for providing advice and guidance to investors on how to invest in DSTs. This includes assessing the investor's financial goals, risk tolerance, and investment portfolio to determine whether a DST is a suitable investment option. The advisor must also provide information on the benefits and risks of investing in DSTs and the specific details of the DST, such as the property location, management team, and financial performance.
Another key responsibility of a DST advisor is to ensure compliance with regulatory requirements. The Securities and Exchange Commission (SEC) has specific rules and regulations to be followed when offering and selling DST interests to investors. The advisor must ensure that all documentation and disclosures are accurate and meet regulatory requirements to protect the interests of the investors.
In addition, a DST advisor must maintain ongoing communication with investors to provide updates on the DST's performance and any changes that may impact the investment. This includes regular financial reporting, property inspections, and updates on any potential risks or challenges facing the DST.
Lastly, a DST advisor must act in the best interests of the investors. This includes providing unbiased and transparent information and avoiding conflicts of interest.
Tom – Sounds great. What’s the next step?
Sera Capital – Simple, it’s now time to get into the weeds. Let’s start by sending you our welcome package. It will provide you with a quick overview of the options available to your client so that you can speak intelligently and get up to speed on how each option works. If you would like to receive our welcome package, let us know, and we will send one your way. After you’ve had time to digest the information, we do a follow-up call to narrow the scope of the discussion with your client so that your time and ours are spent focused on what is right for them.
Tom – Please send me the welcome package, and I look forward to our next discussions.
Sera Capital is a 1031 Exchange & Delaware Statutory Trust Consultant for Advisors, CPAs, Attorneys, Real Estate Agents & their clients. We partner with you to meet your client's unique objectives.
If you're an advisor and you'd like to learn more about how you can help your clients with 1031 exchanges and Delaware Statutory Trusts, schedule your free 30-minute call today.