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Financial Planning > Tax Planning

Boost Your Value by Seeing How Taxes Are Part of Every Financial Decision

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What You Need to Know

  • Tax law changes may cause panic among clients, but they also can be an opportunity for advisors.
  • Today there is record levels of client engagement as they seek assurance around tax laws, the economic impacts of COVID-19, inflation and the large numbers of Americans retiring.
  • Providing all clients with a service that combines tax planning and advice along with wealth management unlocks the value that has historically been reserved for high-net-worth individuals.

Potentially sweeping tax-law changes in 2022 have caused deep uncertainty and even panic among clients and financial professionals alike. But as with any potential changes like this, there’s tremendous opportunity here.

Now is the time for financial professionals to better position their clients to continue to pursue their goals by ensuring that their financial planning and tax planning are working for them in lock step, because there’s no doubt that tax laws will change over time, as we’ve seen with each new presidency in modern history.

Our firm views it as unthinkable that someone’s financial planning wouldn’t be rooted in an assessment and understanding of the impact of taxes every step of the way. One of our leaders even coined the phrase: “Financial planning without incorporating tax planning will someday be considered malpractice.”

The current tax-law uncertainty spotlights the need for tax-advantaged financial planning. Advisors who can give both tax and financial planning advice can optimize the value of investing for their clients and differentiate themselves in their service to clients.

By considering tax implications every step of the way, advisors can add tremendous value to clients through tax efficient asset gathering, qualified vs. non-qualified asset location, tax-loss harvesting, tax-deferral strategies, tax-efficient distribution, and finally, optimized strategies for wealth transfer to the next generation. In doing so, a client’s financial plan has much greater likelihood for success.

Headwinds and Technology Commoditization

Our advisors are seeing record levels of client engagement as they seek assurance around tax laws, the economic impacts of COVID-19, inflation and the large numbers of Americans retiring — whether planned or not. These realities create headwinds for financial professionals who only counsel clients on taxes or financial planning discretely without blending them into what we call tax-advantaged wealth management.

Another headwind for financial professionals is the ongoing commoditization of financial planning through technology; in short, investors can get automated financial planning pretty much from anywhere. Software solutions like eMoney Advisor and MoneyGuide Pro are widely used, but don’t offer the differentiation and added alpha that can be created when adding tax advantaged strategies to a plan.

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By choosing to look through the tax lens and factoring the impact of taxes on clients’ financial decisions, advisors can differentiate themselves with the insights, direction and support they provide clients, and the opportunities they can uncover that software simply can’t do alone.

Financial professionals — who truly understand taxes — go beyond simple income and capital gains tax strategies. Instead, tax focused financial professionals view taxes as integral to every financial decision along the way. In doing so, they can deliver considerably more value to clients along their financial journey than those who focus on tax and wealth management as separate efforts.

Examples of Value

Here are some examples of how we created significant value for clients:

  • While reviewing a couple’s holdings for inheritance planning, one of our financial professionals found the husband’s accounts step-up in cost basis, but not the wife’s as it should have been because the state where the account is held is a community property state — highlighting a potential tax savings of over $700,000.
  • When asked to conduct a review of the qualified retirement savings plan of a client’s business (with $3.1 million in assets and 65 participants), one of our advisors found that the plan was inefficiently designed with low participant engagement. The plan was brought into an advisory relationship garnering: a 105% increase in plan contributions; and $50 million in added wealth management opportunities for the client’s financial professional.
  • An advisor’s long-standing tax client wanted to sell her business but was very anxious about how that would impact her financial future. Supported our firm team, the financial professional created a comprehensive plan focusing on risk management, retirement planning, and asset allocation. The client’s anxiety melted away, she felt secure about her financial future, and after selling the business, she became a $50 million client for the financial professional.

As we head into the New Year and the tax-law uncertainties tied to 2022, there’s no better time  to evaluate whether the services advisors provide to clients has their business heading in the direction they want.

Providing every American with a service that combines tax planning and advice along with wealth management unlocks the value that has historically been reserved for high-net-worth individuals. In fact, that’s a great New Year’s Resolution — to deliver to Main Street investors the same tax and wealth management advantages historically reserved for the wealthy.


Todd Mackay is President of Avantax. He has been with Blucora, the parent company of Avantax Wealth Management, since the beginning of the firm’s journey in wealth management. Todd was a key architect of the company’s acquisition of HD Vest, a business he subsequently led.

He further enhanced the wealth management business’ growth by helping guide the acquisition and integration of 1st Global, creating one of the largest independent broker dealers focused on tax professionals and their wealth management practices.

(Image: Adobe Stock)