While 35 percent of financial advisors say that clients ask about strategies to reduce or avoid taxes, only 18 percent of advisors say that clients proactively want to discuss tax implications of investment strategies, according to new research.
Global asset manager Russell Investments discloses this finding in its first quarter Financial Professional Outlook survey, a quarterly survey of U.S. financial advisors. The survey includes responses from 173 financial advisors working in nearly 100 national, regional and independent advisory firms nationwide.
“As more investors build wealth, tax sensitivity becomes an even more prominent issue because taxes can detract in a meaningful way from an investment portfolio’s return if not managed effectively,” says Frank Pape, director of consulting for Russell’s U.S. advisor-sold business. “The topic will clearly gain even more attention this year as advisors aim to understand — and communicate with clients about — the increase in taxable distributions from many mutual funds and the full impact of the new tax laws.”