How to Reduce Headaches During Tax Season

And I realized my reactiveness around tax season did not deliver value to my clients.

I could see the pain points of CPAs who had to gather client information scattered throughout different sources, creating more room for errors. When I reviewed tax returns completed by someone else, they were missing a Roth conversion, an IRA distribution, or the estimated tax payments.

It fell to me to give the bad news to clients. I dreaded going into a meeting to tell a client that amendments needed to be made to their tax submissions because avoidable mistakes were made.

Working with my team, I created the 1099 letter value-add to streamline tax preparation for our practice, my clients, and their preparers (a critical referral source).

Standardizing our tax prep improved our clients’ lives, and by following the value-add process, there were fewer questions from clients about 1099 forms and fewer tax return errors – making the value-add a win for everyone.

Here’s how to implement the 1099 letter in your practice before tax season.

Getting started

A mistake advisors make when getting into value-adds is that they see what my partner, Matthew Jarvis, and I do and assume that because we can do it, it must be easy.

Advisors jump right in the deep end and flounder.

If you haven’t done value-adds, or you haven’t done this value-add, start small.

If you dive in thinking you can do it all at once, you will blow up the value-add. It will be full of errors, and you’ll send a value-add that’s wrong to clients – which is infinitely worse than sending no value-add.

There’s a reason that so few advisors do value-adds: They’re a challenge. I’m not saying that to feel smug – it’s true. If value-adds were as easy as passing out business cards, everyone would do it.

If this is your first go-around with the 1099 letter, start by listing the clients’ accounts held in your office and offering an invitation to contact you if they have questions.

Next year, look for ways to level up. List the dollar amounts for each account, share the tax submission deadline for the year, or include information on IRS phishing scams.

Your value-adds will evolve and improve with time – but don’t forget to keep it simple, stupid (KISS) on your first attempt.

Map it out

This week, you need to have an outline of your letter (no rough draft yet). Pull out a calendar and determine your execution date and when it needs to be in the mail for your clients.

Don’t work on a part of it each week for x weeks. That isn’t going to work, especially around holidays. Break down each creation process step and have hard deadlines.

Figure out where you’re getting the data from and when you’ll have your team collect and input that data. Identify how the value-add will be generated.

Write down when you’ll need to run drafts of the value-add and when you’ll start working on client accounts.

Give your team time for quality control before the mailing date so you can catch any errors.

Write these hard deadlines on your calendar to keep your team in the loop.

Run the draft on your accounts

Once you have a rough draft of the value-add, run it on your personal accounts to see how it will all come together.

Next, run the value-add on five clients. Run the entire value-add from start to finish to see how the process will work before you teach it to your team.

Once you’ve finished those five clients, have your team to run it using their personal data. You want your team to know how this works and why it’ll be valuable.

Then, your team members need to complete the value-add from start to finish on an additional five clients each.

Have your team present their completed client 1099 letters for you to review so you can catch any mistakes or make adjustments in the process.

The last thing you want is to find that your team ran the value-add on 180 clients and made a blaring misstep on every single one.

Sit down with your team to check on how the process works and identify ways to make the process more efficient.

Get buy-in from your team

Your team needs to buy in on the value-add. They must see the value and understand why it's worth all the work.

You never want your receptionist to answer a call about your new 1099 letter and say, “What 1099 letter? I don’t know why we sent that out.”

Instead, you want to hear, “Oh my gosh! That 1099 letter is fantastic! Here’s how it’s going to help you…”

Walk them through your intended outcome and let your team see how the information in the value-add affects their finances.

Here’s a shortcut

It’s nearly impossible to create a value-add from scratch. Matthew Jarvis and I underwent a trial-and-error process that stretched through years to reach the refined document we mail to clients today.

You’ll have a much easier time if you can find a template and an existing system to follow.

Action Items

To do 1099 letters for your next value-add, get started now!

You only have a few weeks to complete this before you send it out to clients, so outline your plan as soon as possible.

Micah Shilanski, CFP®, is a financial planner who achieves the impossible. Micah is recognized as a leader in the concept of lifestyle design for financial planners and has spoken at conferences across the country. Micah is an advisor with Shilanski and Associates, a founder of Plan Your Federal Retirement, and a co-founder of The Perfect RIA.

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