Financial Advisors in Delaware

Financial advice in Delaware, in plain terms

Delaware is a small state with an outsized financial reputation. It has three counties, about a million residents and a capital city that most people drive past on the way to the beach. It also has a progressive income tax, no sales tax at the register, no estate or inheritance tax and some of the lowest property tax bills in the country. A family moving from New Jersey, Pennsylvania or Maryland often notices the difference within a year.

According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, the median household income is about $84,954, the median home value is about $352,000 and about 73.0 percent of homes are owner occupied. About 20.6 percent of residents are 65 or older, the median age is about 41.6 and about 35.8 percent of adults hold a bachelor’s degree or higher. The unemployment rate in that survey was about 5.1 percent. That is a mature, well educated state with many retirees, and it helps explain why the questions people bring to advisors here lean toward taxes, trusts and retirement income.

What advisors do here

Advisors come in several kinds, and most people use more than one over a lifetime. Our page on wealth management covers households with larger or tangled finances. A financial planner builds a written plan around goals and cash flow. Retirement planning turns savings into income. Life insurance protects people who depend on your paycheck, and an investment advisor manages the portfolio and explains the fees.

How the income tax works

Delaware taxes wages and other income on a graduated scale, so the last dollars you earn are taxed at a higher rate than the first. Social Security benefits are not taxed by the state. Residents who reach a certain age can exclude part of their pension and retirement account income, and the exclusion grows for older filers. The rules and limits change, so confirm current figures with the Division of Revenue or a tax professional. What matters for planning is that income smoothing pays off. A couple that sells a business in one year, or converts a large IRA to a Roth in one go, may land in a higher bracket than if they spread the same income over three years.

No sales tax, but not a tax-free state

Shoppers from Philadelphia, Baltimore and central New Jersey cross the line to buy electronics and clothing at the Christiana Mall in Newark, because Delaware does not charge sales tax on retail purchases. Businesses pay a gross receipts tax instead, and some of that cost is built into prices. For a household, the practical effect is a lower cost of everyday spending than in neighboring states. When you compare Delaware with a no-income-tax state like Florida, remember that Delaware does tax income, so the comparison depends on how much you earn and where the money comes from.

Wilmington: banks, law firms and corporate life

Wilmington is a small city with a large financial industry. Several credit card banks have operations along the Christina River, and the Delaware Court of Chancery and the state’s corporate law make Wilmington a center for business law. A very large share of US public companies is incorporated in Delaware, which keeps lawyers, registered agent firms and trust companies busy. People who work in these fields often have stock awards, bonuses, partnership income and deferred compensation, and the planning questions are about concentration, timing and tax. Those who work inside the city limits also pay the Wilmington city wage tax, so ask your payroll department how it appears on your pay stub.

Chemicals, science and the DuPont legacy

For generations the chemical industry shaped northern Delaware. DuPont and the companies that grew out of it employed chemists, engineers and managers, and many retired households in the Brandywine Valley still hold company stock, pensions or both. If you worked for a large employer and own a large block of its shares, an advisor can help you plan how to sell gradually, use the net unrealized appreciation rules where they apply and keep one company from controlling your retirement. Corporate restructurings also change pension rules, so request written statements of what you are owed.

Holding a lot of one stock?

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Dover: state government and the Air Force base

Dover is the state capital and the home of Dover Air Force Base, which together make government and the military the area’s steady employers. State employees belong to the Delaware State Employees’ Pension Plan, a traditional pension that pays a share of final average pay based on years of service, and many also save in the state deferred compensation plan. Service members and their families have different rules: the Thrift Savings Plan, a military retirement system, TRICARE and legal protections on debts. A planner who understands both public pensions and military benefits can help a household with a mix, such as a civilian spouse and a servicemember.

Beaches, Sussex County and retirees

Rehoboth Beach, Lewes, Bethany Beach and Dewey Beach draw retirees, second-home buyers and weekend visitors from Washington, Baltimore and Philadelphia. Sussex County has been among the fastest growing parts of the state, and many newcomers are in their sixties. A couple from suburban Philadelphia who sells a house in Montgomery County and buys in Lewes may cut their property tax bill sharply and keep more of their pension, but they also take on new decisions about healthcare access, flood exposure and whether to keep a house in two states. Retirement planning for these households begins with a clear budget, then an honest look at the full cost of a coastal home.

Flood, storms and sea level rise

Delaware is one of the lowest-lying states, and much of its shoreline sits close to sea level. Nor’easters and hurricane remnants have flooded coastal towns for decades, and sea level rise is raising the risk that tidal flooding becomes more common. Standard homeowners policies exclude flood damage. Flood insurance comes through the National Flood Insurance Program or a private insurer, and it usually has a waiting period before it begins. Many policies also carry separate wind or named storm deductibles. Before you buy near the water, check the flood zone, ask for the elevation certificate and get a quote for all three layers of coverage.

Delaware trust law

Delaware is a national center for trusts, and the attraction is legal rather than tax. The state permits asset protection trusts, in which a person can place assets in a trust for their own benefit and gain some protection from future creditors, subject to limits. It allows trusts that last for many generations, trusts in which different people manage investments and decide distributions, and strong privacy rules. Trust companies in Wilmington administer these arrangements for families who live in other states. Most households do not need a trust of this kind, but if you own a business, face lawsuit risk or want to plan across generations, ask an estate attorney whether a Delaware trust fits. Our estate planning guide explains how wills, trusts and beneficiary forms fit together.

Retirement in Delaware

The tax treatment of Social Security and the age-based pension exclusion make the state attractive to retirees, and the coast adds lifestyle appeal. State employees should request a benefit estimate from the pension office before choosing a retirement date and compare survivor options. Everyone should map healthcare costs, since Medicare does not cover long-term care. The state insurance department runs a free counseling program, ELDER Info, that helps residents compare Medicare plans. Our retirement planning guide walks through Social Security timing, withdrawals and housing choices.

Property tax and housing

Property taxes in Delaware are low by regional standards, because bills are made up of county, school district and sometimes municipal charges set against assessments that date from earlier decades. Reassessments have changed the picture for many owners, so check your most recent notice. Homeowners 65 and older may qualify for a school property tax credit, and eligibility depends on income and other conditions. Rent in the state has a median of about $1,401, and owners with a mortgage report median monthly costs of about $1,816.

Saving for college

The Delaware College Investment Plan is the state’s 529 plan, and contributions may be deductible on a Delaware return within limits that change over time. Compare its fees and investment options with other states, then decide. The University of Delaware in Newark and Delaware State University in Dover, plus out-of-state schools many families consider, make college costs a common planning topic. Our college savings guide explains how 529 plans work and how they affect financial aid.

How to choose an advisor in Delaware

1. Check registration. Search the advisor in the SEC adviser database and FINRA BrokerCheck. State-registered advisers are overseen by the Investor Protection Unit of the Delaware Department of Justice.
2. Ask how they are paid. Fees, commissions or a mix all exist, and each shapes the advice.
3. Get a fee quote in dollars. A percentage means little until it is a yearly amount.
4. Read Form ADV. It lists conflicts, services and disciplinary history.
5. Ask about people like you. A good advisor can describe how they handle a situation similar to yours.
6. Confirm how you will meet. Many advisors work by phone or video, which suits Delaware’s small size and long commutes.

What advice costs

Many advisors charge about one percent of managed assets a year, with lower rates on larger accounts. Others charge a flat annual fee, an hourly rate or a one-time fee for a written plan, and commission-based advisors are paid through the products they sell. On a $400,000 portfolio, one percent is $4,000 a year, so ask what you receive for that amount and whether planning is included. The Delaware Department of Insurance licenses insurance agents, and consumers can file complaints with it. Questions about securities go to the Investor Protection Unit.

Budgeting in a low-tax state

Lower taxes at the register and on the house do not fix a budget by themselves. A family in Newark that saves a few hundred dollars a year on sales tax can easily give it back through a higher auto insurance bill, a longer commute to Philadelphia or a flood policy on a shore property. Start with a monthly plan that lists fixed costs, saving goals and spending you can adjust, then point the tax savings toward something specific, such as an extra payment on a loan or a deposit into a Roth IRA. Our budgeting and saving guide shows how to build one, and our investing guide explains where the saved money can go once the emergency fund is full.

Delaware financial planning guides

Frequently asked questions