Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
This article is the last in a series of the seven most-common mistakes financial advisors make on tax planning with clients (visit RetirementTaxServices.com for more great content from Steven Jarvis and RTS).
When I last Googled “IRS RMD Table,” the first result that popped up was a link to an active IRS web page with the outdated RMD information. Millions of people who clicked on the first link provided by Google were given, by the IRS, incorrect information. Countless other examples of incorrect tax information, ranging from capital gains rates to Medicare premiums to gifting limits and especially the math on Roth conversions can be found prominently displayed across the internet, including on some of the most reputable websites.
This plague of tax misinformation isn’t limited to consumers searching Google. Continuing education classes, conference workshops and other advisor-facing sources have equally outdated or just plain wrong tax information. Even when the information is current and correct, there is very little information that helps advisors and their clients bridge the gap between tax knowledge and actual implementation of tax strategies.
To become experts at implementing tax strategies, advisors have to put in the work. There are a lot of great resources in the profession. Even though I put out a ton of tax content, I still love learning from the tax section of Advisor Perspectives, the tax “nerds” at Kitces.com and other more specific resources like Ed Slott on all things IRA. These and other resources will give you great insight, but only if you consistently study and implement.
That may sound like a daunting task. The tax code is enormous and often lacks logic or reason. But to be a tax expert for your clients, you don’t have to commit the entirety of the code to memory. You need to consistently spend time learning how to implement the strategies and actions that are most relevant to the clients you serve. Focus on what applies to the majority of your clients and commit to being part of finding the solution; you don’t have to always know the solution without referencing a reliable source.
When you are deciding what resources to focus your time on, look for the ones that help bridge the gap between technical nuance and what works in practice. Google will beat you every time on volume, but you can win on effective communication. Look for content that helps you translate the tax code into language your clients are excited to act on. That is the best way to deliver massive value when it comes to tax planning.
Action items
Understand that the reason so few advisors and firms do tax planning is that it takes a lot of work and dedication to become proficient. Respect the grind. If you are going to do any tax planning, which includes advising a client to make a Roth contribution or even how much to withhold in taxes, dedicate a portion of your personal development budget to staying current on taxes. Block out dedicated time each quarter to attend seminars about or study on your own the latest tax planning strategies.
Hint
You can save a lot of time and energy by learning from people who implement instead of simply people who theorize.
This article is the last in a series of the seven most-common mistakes financial advisors make on tax planning with clients (visit RetirementTaxServices.com for more great content from Steven Jarvis and RTS).
Steven A. Jarvis, CPA, MBA, is CEO and head CPA of Retirement Tax Services.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
