Financial Advisors in Tennessee

Financial advice in Tennessee, in plain terms

Tennessee draws savers for a simple reason. Paychecks arrive without a state income tax, and since the repeal of the old tax on interest and dividends, investment income is not taxed by the state either. A family that moves here from a high-tax state often sees take-home pay rise immediately. The same family then discovers that the state makes up revenue elsewhere, mainly through sales and property taxes, so the real savings depend on how they spend.

According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, the median household income is about $69,595, the median home value is about $286,700 and about 66.9 percent of homes are owner occupied. Nearly 17.1 percent of residents are 65 or older, and the median age is about 38.9. Those numbers describe a state with a large working-age population, a growing group of retirees and housing that has become more expensive in the Nashville area than in the rest of the state.

What advisors do here

An advisor can help in several ways, and the right type depends on what you need. Our guide to wealth management covers households with larger or more complicated finances. A financial planner builds a written plan around goals. Retirement planning focuses on turning savings into income. Life insurance protects dependents, and an investment advisor manages the portfolio. Many people use a mix over time.

Income that does not arrive evenly

Tennessee is known for industries where pay swings from month to month. Nashville and Memphis host songwriters, session players, touring crews and producers whose royalties arrive in irregular amounts. Healthcare employs a very large number of people in the Nashville area, from nurses on contract to physicians with partnership income. The Smoky Mountain region runs on tourism, where the summer and fall brings crowds and the winter brings slow weeks. Oak Ridge supports scientists and contractors, and automakers and logistics firms employ many production and warehouse workers.

When income varies, planning starts with a cash reserve large enough to cover several months, a system for setting aside quarterly tax payments for self-employed workers and a monthly budget built on the lowest typical month. Retirement saving options for the self-employed, such as a solo 401(k) or a SEP IRA, let you contribute more in strong years. Our budgeting and saving guide shows how to build a floor under uneven pay.

Why sales tax shapes the budget

The state sales tax is paid on most purchases, and local governments add their own, so combined rates in many counties run close to ten percent. Groceries are taxed at a reduced state rate but are not exempt. Because there is no income tax, a household in Tennessee pays more of its total tax through what it buys, and the burden falls most on families who spend most of their income. Plan large purchases with the full rate in mind, and account for it when you compare the cost of living with a state that taxes income instead.

Property tax and homeowners

Property taxes are set by counties and cities and are generally lower than in many states, though assessments rise with values, and the Nashville area has seen steep increases. Older homeowners and disabled owners may qualify for a program that freezes or reduces the tax bill, and some veterans with service-connected disabilities qualify for relief. Eligibility rules and income limits change, so confirm them with the county trustee or assessor. Homeowners insurance deserves attention as well. Tennessee sits near the New Madrid fault, and standard policies exclude earthquakes, and tornado and hail damage claims have grown more costly, so check your deductibles for wind and hail.

Trust law that is different

Tennessee has built a reputation for trust-friendly law. The state permits a self-settled asset protection trust, under which a person can place assets in a trust for their own benefit and gain some protection from future creditors, subject to important limits and waiting periods. It allows directed trusts, in which different advisors may handle investments and distribution decisions, and long-lasting dynasty trusts for transferring wealth across generations. Tennessee also allows married couples to elect community property treatment for assets placed in a qualifying trust, which can have a federal tax benefit at the first death. These tools are not for everyone, but families with a business, large investments or a concern about lawsuits may want to ask an estate attorney whether any of them fit. Our estate planning guide explains how wills, trusts and beneficiary forms work together.

Planning for a larger estate?

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Retirement in Tennessee

Many retirees choose the state for its mild winters compared with the north, lower housing costs than coastal markets and the absence of tax on Social Security, pensions and retirement account withdrawals. State and local government workers belong to the Tennessee Consolidated Retirement System, and newer employees are in a hybrid plan that combines a pension with a defined contribution account. Teachers and public employees should request a benefit estimate and ask how early retirement affects the monthly payment. Healthcare costs deserve special thought, since access to specialists varies between the major cities and rural counties. Our retirement planning guide walks through the steps from saving to drawing income.

Education and family saving

The state offers the TN STARS college savings program, a 529 plan with tax-deferred growth. Because Tennessee has no income tax, there is no state deduction for contributions, so compare the plan on fees and investment choices with plans from other states. The Tennessee Promise program covers tuition at community and technical colleges for eligible high school graduates, which affects how much a family needs to save for those years. Tennessee also has an ABLE program for people with disabilities, which lets families set aside money without losing means-tested benefits. Our investing guide explains how to choose funds inside these accounts.

How to choose an advisor in Tennessee

1. Check registration. Search the advisor in the SEC adviser database and FINRA BrokerCheck, and ask the Department of Commerce and Insurance about state registration.
2. Ask how they are paid. Fees, commissions and a mix of the two all exist, and each affects advice.
3. Request a written fee quote. Insist on a figure in dollars.
4. Read the disclosure form. Registered advisors file Form ADV with their conflicts and history.
5. Test the fit. Ask for an example of a client situation like yours.
6. Confirm the service model. Find out who you will talk to, how often and by what method.

What advice costs

Costs depend on the model. Many advisors charge about one percent of managed assets a year, with lower rates for larger accounts. Others charge a flat annual fee, an hourly rate or a single fee for a written plan. Commission-based advisors are paid by the products they sell. On a $500,000 portfolio, one percent is $5,000 a year, so ask what you receive for it, whether planning is included and how the figure compares with simpler options.

Memphis, Nashville, Knoxville and Chattanooga

The state’s big metro areas differ enough that a planner will ask where you live before anything else. Nashville has seen the fastest growth in housing prices, and buyers there often stretch to afford a home, which can crowd out retirement saving. Memphis has logistics and shipping jobs, with the benefits and pay patterns that come with them, and homes cost less than in Middle Tennessee. Knoxville combines a university, national laboratory contractors and a growing base of retirees drawn to the mountains. Chattanooga has rebuilt its economy around manufacturing, technology and outdoor recreation, and its housing costs have climbed as newcomers arrive. Because an advisor works by phone or video, you can compare options from any of these places without driving across the state.

Military families near Fort Campbell and Millington

Households connected to Fort Campbell near Clarksville and the naval support activity near Memphis carry their own planning questions. Military pay includes allowances that are not taxed, the Thrift Savings Plan offers low-cost funds, and survivor benefits and service-connected disability pay change the picture for a spouse. Service members who leave active duty often use the GI Bill and then start civilian careers with employer plans. A planner familiar with these programs can help you coordinate them, particularly when a move to a new duty station or a transition to civilian work changes income overnight.

Paying for long-term care

Care in a nursing facility costs thousands of dollars a month, and Medicare pays for only a short stay after a hospital visit. Tennessee’s Medicaid program, called TennCare, covers long-term care for people with limited income and assets, but it looks at transfers made in the years before an application, so giving away property to qualify can backfire. Families usually weigh three options: pay from savings, buy a long-term care or hybrid life insurance policy while healthy, or plan with an elder law attorney well ahead of need. The right choice depends on your assets, health and family, and the time to start thinking about it is in your fifties or early sixties rather than after a crisis.

Tennessee financial planning guides

Frequently asked questions