Advisor Tax Mistake #5 – Your Tax Planning is Making Your Client’s Life Harder

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This article is the third in a series of the seven most common mistakes financial advisors make on tax planning with clients.

Growing up camping, my Boy Scout leaders would often ask the quasi-philosophical question, “If a tree falls in the forest, but nobody is there to hear it, does it still make a sound?” The corollary for tax planning is, “If you save your client a gazillion dollars in taxes, but it was a giant headache and they were frustrated every step of the way, will they still refer you to their friends?”

If your tax planning makes your clients’ life more difficult, you’re doing something wrong. For example, if they struggle to get all their tax documents each year, you lose. If they forget about the Roth conversion and get angry when the tax bill comes due in April, you lose. If their CPA didn’t get notified about a qualified charitable distribution (QCD) and the return must be amended, you lose. If getting you a copy of their tax return is a hassle (see mistake #7), you lose.

Sound a little too familiar?

Consider the advisors who sent a 1099 letter in January, worked directly with the client’s tax preparer, established a QCD checkbook/debit card, did not wait to pay taxes on gains harvesting and/or Roth conversions, or assisted clients with online estimated payments