Retail investors overwhelmingly want their financial advisors to help them save money on taxes, although many firms don’t offer tax planning, new research from Cerulli Associates finds.
Sixty-nine percent of retail investors consider it important for their advisor to help reduce their tax bill, with even more high-net-worth households placing a high priority on tax savings — 79% with over $5 million in assets — according to the group's report, “Advisors in Transition: Challenges and Best Practices,” released Thursday.
At the same time, only 47% of practices offer tax planning, according to the research, which was sponsored by fintech firm 55ip.
Investors are increasingly prioritizing tax considerations when selecting an advisor, according to Cerulli, which identified tax assistance as a key consideration for advisors considering switching firms or involved in other transitions.
"Advisors must be more attuned to the tax implications associated with potential transitions. Tax management is emerging as an impactful concept to introduce to clients," noted Andrew Blake, Cerulli Associates associate director.
“By adopting more efficient, tech-enabled solutions and emphasizing effective tax management, advisors can enhance their value proposition and better meet the needs of their clients in an increasingly tax-aware environment,” Blake said.
Wealth management firms have an opportunity to implement transition plans that facilitate tax-aware account migration to appeal to advisors who are deciding where to affiliate themselves, Cerulli suggested.
"The potential loss of clients, magnified by time spent on operational and compliance challenges, is an enormous risk during a transition. By offering dedicated support to address the various operational challenges that arise during practice transitions, firms can facilitate smoother client onboarding and accelerate profitability,” Blake said.
Cerulli interviewed 12 advisors who transitioned their practices in the past three years, as well as executives from three private equity firms investing in wealth management, three asset managers and two RIA aggregators.
Advisors mostly serving affluent clients with at least $2 million in assets report that, beyond diversification, their top portfolio objectives for the next year are generating absolute returns and tax optimization, the research found.
The research found that in the second quarter of 2025, 38% of advisors expect tax transition assistance from model providers, compared with 22% in 2021.
"As more advisors reevaluate which affiliation model best aligns with their long-term goals, wealth management firms have a valuable opportunity to attract and retain both advisors and their clients’ assets," the report said.
About 10% of advisors anticipate transitioning their practice this year, either through consolidation or switching firms, Cerulli reported, adding that it's key for wealth management firms to ensure a smooth transition with infrastructure designed to protect assets and advance future growth.
Advisors who move from one broker-dealer to another typically lose about 22% of their assets, while those switching from a broker-dealer to an independent firm lose around 18% and those transitioning from one independent firm to another lose about 11%, Cerulli reported.
To help hold onto assets during the waves of M&A and retirements coming in the industry, many wealth management firms are adopting technology to support transitions and tax management, the firm said.
“We have observed across the board that wealth managers have experienced transition challenges including project planning, stakeholder management, integrations and client communication,” said Mike Camp, head of Client Solutions for 55ip.
"Advisors can facilitate successful implementation by demystifying high-volume onboarding at scale. Intended advisor and client outcomes, with more control and less work, can be achieved with a tax-smart, technology-driven transition plan," Camp explained.
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