IMGCAP(1)]Now that the crush of tax season is safely behind us, and many tax professionals have already taken some well-deserved time off, many of them are also now experiencing an uneasy letdown.
Despite their collective sigh of relief at the end of tax season, the lull that afflicts the profession afterwards can be disquieting. Just as too much work can be unnerving, the sudden drop-off in activity can also be unsettling.
For the ambitious tax advisor, however, this temporary hiatus can offer an extraordinary opportunity to build the business and reinvigorate client relationships – even without soliciting new clients or finding new projects to work on.
One of my oldest friends is a veteran tax advisor who diligently makes it her practice to use this post-tax-season period to engage in a detailed analysis of every client’s tax return. She compares each return to the prior season’s to see where things changed and where they didn’t, and considers what areas could be improved with a little more thoughtfulness.
She then schedules time to sit down with her clients and show them what she has observed as a result of her “post-mortem” examination, and provide suggestions for future steps. By looking backwards, she is able to help her clients going forward.
This is an approach that could work broadly for all tax professionals. Quite simply, now that your clients’ tax returns are done, you can take some time for calm reflection and intensive examination to focus on the returns you recently completed. This can yield a treasure trove of insights and suggestions for ways to improve upon your clients’ tax vulnerabilities, to help them improve upon their financial performance for the year that has already begun, and to improve your own level of service and client engagement.
Where to Begin?
As tax professionals know so well, every line in the tax return tells a story. Each line yields insights into every client’s individual financial and personal life.
In a special, invitation-only pre-conference session at Connect16, the annual national meeting for HD Vest Financial Services, held in Washington, D.C. this week, my friend joined a panel of experts among independent tax and financial advisors, together with broker-dealer industry leaders to discuss how tax advisors can approach this process.
Without overwhelming her clients, my friend considered a few major categories as effective conversation starters:
- What was different this year? As a point of departure, she would examine what was different in the latest return from the year before. Was there a sudden change in income, or medical expenses? Were the same deductions taken? Then she would delve into questioning why these changes had happened. This was a good way into a conversation regarding the client’s finances and it often elucidated topics of great significance that were previously unknown to her.
- What efficiencies were achieved? In addition, she would also point out the improvements they had made from the previous year. Were these a result of suggestions they had previously discussed? Were similar, additional types of efficiencies available to capture in the current year, in different areas of the return?
- What life changes are on the horizon? This would bring the conversation to focus on major upcoming life turning points – education expenses, home renovations, weddings, divorces, etc. – and how to make sure that their tax ramifications were not only taken into account, but optimally planned for.
From Tax Preparer to Tax Planner to Financial Advisor
For my friend, at the very least, asking these questions, and seeing how they could result in an even better outcome in the future, helped cement the advisor-client relationship. But beyond that, they pointed the way to a deeper level of professional relationship. In essence, my friend had taken the first step from being merely a tax preparer to becoming a tax planner, and, essentially, a financial planner and financial advisor to her clients.
Not every tax advisor wishes to become a financial advisor. Some are happy simply to remain tax professionals; others realize that working in closer concert with the client’s financial advisor can significantly improve the client’s financial performance.
For some tax professionals, however, the step to becoming a financial advisor in addition to being a tax advisor seems a natural progression. No one has as profound a view into the client’s holistic financial life as their tax advisor. By adding a new layer of service – supplying investment advice and wealth management capabilities, for instance – the tax advisor can have considerably more impact on their client’s overall financial health.
For those who wish to make this transition, the first step is to find the right broker-dealer. Working with the right broker-dealer can provide the necessary training and point the way to the required certifications, followed by obtaining the resources, range of investment products and the practice support that can make a tax advisor, armed with investment expertise and wealth management skills, into a financial planner whose engagement with the client is not once a year but an all-year-round endeavor.
Scott Rawlins is managing director of sales at
