Last year, Congress enacted the first overhaul of the U.S tax code in more than 30 years. Unfortunately, the new law disadvantaged investors, financial planners and registered investment advisors in two important ways.
First, the law eliminated the ability of investors to deduct advisory fees from their taxes. Second, the law limits the ability of small-business owners to take advantage of the beneficial tax treatment for pass-through businesses.
The Financial Planning Association and members across the country are proactively engaging federal lawmakers to encourage Congress to amend the new tax law accordingly so financial planners, RIAs, and investors are not disadvantaged.
Consumers are concerned with their prospects for retirement and engage with financial professionals to help them with an ever-changing array of products and services. By eliminating the deduction of financial advisory fees, it effectively raises the cost of investment advice to investors, which negatively impacts millions of Americans saving for retirement.
As one of its policy priorities, FPA members were in Washington, D.C., in June advocating to their federal lawmakers to make financial planning fees deductible. Financial planners help individuals and families with the entirety of their financial health so they can plan for retirement with confidence. A tax deduction specifically for financial planning fees would signal that this profession provides needed services for all Americans, not just those with significant investment accounts.
Financial planners also offer vital advice on college planning, estate planning, insurance needs, tax efficiency and retirement planning. Our FPA members and their clients know the value of holistic financial planning.
Another provision limited the ability of small financial professional business owners, including many FPA members who are RIAs and financial planners, to take advantage of the beneficial tax treatment for pass-through businesses.