When financial advisors, CPAs, and attorneys maintain a healthy and communicative relationship, they become a powerhouse team for clients (especially during tax season).
So even though it can come with challenges, this team’s collaboration and combined knowledge make a holistic team that can better manage a client’s financial, tax, and legal goals.
Here are some benefits of incorporating clients’ CPAs into your practice:
Help clients avoid surprises during tax season
Investment decisions and tax efficiency go together when managing and advising clients on their financial decisions. Portfolio performance can be greatly affected both positively and negatively by tax implications.
“That’s why periodic check-ins with our clients’ outside accountants can help us make sure our work adheres to any of the long-term tax planning they are doing” (Kiplinger).
While it is beneficial to maintain communication throughout the year, it’s especially important at year-end and as tax season approaches. Advisors who collaborate with other financial professionals during these crucial times can work with their client’s CPA to leverage a variety of tax strategies such as tax-loss harvesting or Roth conversions of their traditional retirement account.
Get a multi-dimensional look at client portfolios
As you continue to help clients navigate various life events, goals, and milestones, keep in mind that their financial situation will evolve. Factors such as cash flow, investment strategies, retirement planning, and tax preparation impact one another.
And while it certainly takes a village to maintain your client’s financial plan, the partnership between a financial advisor and tax professional is critical.
“By incorporating tax planning into your investment strategy, you can make better-informed decisions to maximize your dividends while maintaining tax efficiency,” (CRR CPA).
Align strategies of all parties
When thinking about effectively communicating with a client’s CPA, consider the goals and objectives you share. As the financial advisor, you typically focus on the present and future state of your client’s financial profile, while the CPA looks at the past and present to evaluate their tax dependencies.
Due to the potential misalignment of intent, effective collaboration is essential:
“[It] removes the need for a client to cross-examine each party’s recommendations, and thus cuts down on the overall time spent pivoting between advisers,” (PICPA).
Working directly with your client’s tax professionals can streamline communication and reduce the frustration around the client trying to effectively relay to you why their CPA recommended one strategy over another.
Make meaningful connections for the future
Connections are essential to professional relationships, both now and in the future.
“CPAs are routinely bombarded by financial professionals who want to refer business to them. An astute advisor reverses the overture, so the CPAs could see offering value to them,” (U.S. News).
With all the in-depth knowledge advisors have about a client’s unique situation, they can refer them to tax professionals that match their needs, showing professionalism and industry expertise to all involved. These connections could lead to referrals from both the CPA end as well as the client.
Overall, it benefits everyone in a client’s financial strategy to work together for a variety of reasons.
“The successful collaboration between a financial advisor and CPA shows that nurturing COI relationships does more than produce mutually beneficial results. It also demonstrates to clients your professionalism, value, and trustworthiness,” (U.S. News).
In addition to nurturing your professional relationships, working with your client’s CPA allows clients to know what to expect, align their financial decisions, and streamline money management as tax season approaches.