Carson Group's New Tax Whiz: These Are the Strategies Clients Need

“By leveraging tax planning solutions, advisors can help their clients optimize their financial outcomes, minimize tax liabilities or increase after-tax returns, which have a compounding effect on wealth,” Taylor said. “I am excited to be part of a community of like-minded practitioners who can come together to refine our skills and share best practices.”

Here are highlights from our conversation, edited for length and clarity:

THINKADVISOR: Can you tell us a little more about the thinking behind the Carson Group’s acquisition of Taylor Financial and its tax-focused team? Was it a difficult decision for you as a founder in any way?

DEBRA TAYLOR: I founded my firm 26 years ago and became a Carson Wealth office in January 2025. I started thinking about my succession plan early and wanted to set my practice up to continue growing and not skip a beat in the years to come, so it was important to me to find a partner who shares the same vision.

My daughter, Caroline, is my G2 advisor, and it was important to both of us that she be comfortable growing her career at Carson for many years to come. We had already been working with Carson for a decade, so as Carson looked to make tax planning a core pillar of its offering, it made sense to deepen our partnership.

At a high level, how important are tax advisory capabilities in the context of modern wealth management and the competition for both advisor talent and clients? Do you think that advisors will vote with their feet to get the tax-focused support services they need to win clients?

I have been doing tax planning as part of my business for many years. My family owned an accounting business, and so I grew up understanding the importance of tax. When I moved into wealth management, I naturally incorporated tax planning into my business.

But for many advisors, tax planning is still a relatively new concept and something they have not added to their portfolio of services. As investors learn about the tremendous impact tax planning can have on their portfolio and on growing wealth in a way that is not tied to market performance, I think more people will expect their advisor to offer a holistic wealth management approach that includes tax planning.

Cerulli recently found that more investors are expecting their advisor to provide holistic financial advice, which makes sense. If you were choosing between an advisor who offered tax planning as part of their services and looked at managing your portfolio holistically and one who did not, meaning you had to seek out tax planning separately or not benefit from it at all, which would you choose?

I know that in my own practice, I’m able to beat out large competitors to recruit and retain very large clients due to the thoughtful and proactive approach that we take with tax planning.

How do you think about the difference between “tax planning” and “tax preparation”? Is this an important distinction or mere semantics?

Tax planning and tax preparation are vastly different — I think of tax preparers as historians with numbers. Tax preparation looks back at the last year, tax planning is forward-looking and proactive.

Tax preparation is largely carried out by a tax preparer independently and is generally confined to one year, with limited opportunities. In contrast, tax planning is carried out over several years with input from the client and the opportunities are unlimited.

Tax planning is a holistic way to view a portfolio, optimize financial outcomes and build greater wealth over time. Because it's forward looking, tax planning can reap hundreds of thousands or millions of dollars in additional wealth for clients.

The numbers are that large, particularly for high-net-worth clients and clients with large retirement accounts. For many clients, taxes will be their largest expense in retirement so tax planning makes a lot of sense.

What are some of the most important tax considerations for clients in the current environment? Roth conversions? Tax-loss harvesting? Capital gains management? ETFs for portfolio efficiency?

All of the above. This is why tax planning is so valuable and so important to clients — it is highly customized and varied depending on your situation and your goals. And, it changes every year, which is different than an investment plan or even a financial plan in many respects.

It is literally like bringing a tool kit into every meeting with a client and using whatever tools make the most sense based on the client's situation at the time. That could be distribution planning, tax loss trading, tax loss harvesting, concentrated stock or NUA work, legacy planning and so on.

Historically, advisors have advised deferring taxes for as long as possible, which made sense when IRA balances were smaller, life expectancies were shorter and tax laws favored large retirement account balances. Today, IRA balances have grown tremendously, and performing a Roth conversion in some cases could actually lower clients’ lifetime tax bill.

Additionally, in times of economic volatility, Roth conversions are an even more attractive option, as it’s cheaper to convert when a client’s portfolio is down, creating a lower tax rate.

Do you agree with comments from the likes of Ed Slott that Roth-style accounts are increasingly important as questions about higher future tax rates come to the fore? Given the outlook for Social Security and Medicare, as well as the federal deficit, it’s hard to see rates staying this low indefinitely, even if the 2017 tax overhaul is extended later this year. 

Ed and I are completely aligned here and in most areas. I couldn't agree more that we have a spending problem in Washington and they are going to be looking to stop that gap, if not now, then at some point. Tax rates are historically low. These are all undisputed facts. I call it tax policy risk. And whenever you have risk, you need to address it — mitigate it, outsource it, spread it around and simply decrease it.

In short, overfunding retirement accounts can sometimes result in tax challenges down the line — a ticking tax time bomb that most clients are not aware of.

It is naive to believe that our larger earners and those with larger incomes [from required minimum distributions] won't be prime targets. We have already seen that with the passage of the Secure Act, which was anything but. And we also see it with the widow’s penalty. Driving down the traditional retirement account balances and building the Roth accounts is one of the best ways to combat this "tax policy" risk.

Are there any specific tax strategies that are important to consider for high-net-worth individuals? Perhaps trust and estate planning techniques that advisors should know? 

I say that you need to begin with the end in mind. That is even more important with high-net-worth clients as there is so much more at stake. For high-net-worth clients, as discussed above, additional traditional retirement contributions can often create increased tax liabilities over time.

There needs to be a plan in place early on to ensure that the traditional retirement accounts don’t grow too large and that the client engages in tax diversification, building all three types of accounts (tax deferred, tax free and taxable). In addition, advisors need to be proactive with their high-net-worth clients, considering asset location strategies which can reap significant benefits over time.

Going beyond, consider coupling charitable contributions with the Roth conversions, which can be a powerful way to kill a few birds with one stone. We model this out for clients and they love being generous and also building their Roth accounts while getting a tax break.

Also remember that estate planning is best done early and with lots of runway. Although the lifetime exclusion continues to be generous, for clients who are in the "splash zone," as I call it, they should still start their estate planning journey now.

Perhaps consider less burdensome trusts, such as life insurance trusts, grantor retained annuity trusts, qualified personal residence trusts and spousal lifetime access trusts. These trusts also help you to get assets out of your estate while you are able to maintain a large measure of control. The sooner these types of strategies are implemented, the sooner you limit the growth of your estate and protect yourself from future tax law changes.

The bottom line on all of this is that it is important for advisors to focus on clients’ lifetime wealth accumulation, and also the ability to position assets for the surviving partner and heirs. Advisors need to play the “long game,” and instead of tax planning on a year-to-year basis, plan for the client’s lifetime and the family's lifetime.

Pictured: Debra Taylor