Your Financial Planner, CPA, and Lawyer Work Best When Working Together


Imagine you have a large tax loss to carry forward – a position that can give investors a lot of flexibility and provide a cushion against capital gains. Knowing that you have this arrow in your tax quiver, your advisor might be looking to improve your portfolio by reducing earnings and deploying these products in investments that have fallen behind, making sure these moves take place in a tax-efficient manner. .

Now imagine that same situation where your advisor didn’t know you had already exhausted those losses. What was supposed to be a wallet upgrade could instead become a tax liability. You would surely be unhappy and you might be looking for a new advisor.

Fortunately, these situations can be avoided by having open lines of communication with client accountants. In my practice, we proactively coordinate with other professionals with whom our clients engage whenever our work overlaps with theirs. We want to make sure that any movement we make will be beneficial from all angles.

I wish more financial advisers would do the same.

The case of coordination

It’s not uncommon for clients to think about their financial lives in isolation. If they need financial advice, they hire a financial planner. If they are looking for sophisticated tax strategies or structuring the sale of their business, they consult an accountant or a lawyer, respectively.

But I would say that clients could get a lot more out of each of these interactions if they worked with these professionals in a holistic way.

Without open communication and coordination, the professionals you rely on could unintentionally undermine the work of others. Even the most open-minded clients may not know all the details of the work they’ve done with an accountant or lawyer. We don’t expect our clients to be tax or legal experts, which is why they hire these professionals in the first place. We therefore discuss with people who know these subjects to work towards the best solutions for our customers.

How an accountant can help you

Every time we start working with a client, we ask to see their tax return. The 1040 reveals a lot about what is going on in their life. Are they on the right track for retirement? Is college education a priority? Have they taken the necessary steps to implement the necessary wealth planning? The tax return contains many of these details.

But sometimes we don’t have access to the tax return. A busy customer may forget to provide it, or they may have an incomplete version. Other times, there may be things in the return that we don’t understand, and we need additional information to understand its meaning. This is when we seek the expertise of an accountant to fill in the gaps.

There are many situations where working directly with a client’s accountant helps us better serve our clients.

Tax planning: Tax efficiency is a key consideration whenever we make investment decisions because we see taxes as a key sticking point on portfolio performance and we want to avoid this. But we are not tax planners. This is done at the individual level with an accountant. That’s why periodic audits with our clients’ external accountants can help us make sure that our work is in line with any long-term tax planning they do.

In particular, we want to be in communication towards the end of each year, when accountants have a clearer picture of the tax payable from our clients. For example, if an accountant identifies a heavy tax burden, we might be able to reap tax losses by selling declining stocks to offset the gains. Alternatively, if a client experiences a drop in their taxable income, we can suggest a Roth conversion of their individual retirement account to take advantage of their slipping into a lower than normal tax bracket.

Retirement planning: Another situation that comes up often with our business owner clients is the decision to set up retirement plans for themselves and their employees. First, we want to let their accountant know that we are doing this. Additionally, we need to understand the client’s taxable income so that we can advise them on how much contribution they can make. Some customers have a good understanding of this. More often than not, they don’t have the exact amount on hand, so it’s imperative that we consult with their accountant.

Sale of a business: When advising clients on the sale of a business, we need a clear understanding of their tax situation. By knowing this before the sale, we are able to tailor our advice appropriately – and more importantly, we make sure that we set aside enough funds to cover the taxes they will have to pay so that it doesn’t. there are no nasty surprises at tax time.

Customers who are in the process of selling their business cannot be expected to know the granular details of their tax liability. Their attention is focused elsewhere, and we don’t want them to have to take their eyes off the ball. This is why we want to be in contact with their accountants.

Working with lawyers

Likewise, coordinating with our clients’ external lawyers can also help us achieve better results for our clients. At first glance, it might seem like lawyers and financial planners wouldn’t need to consult because their fields seem so different. In reality, we can each inform the other’s work. For this reason, we start our engagements with clients with a document review to make sure that the beneficiaries are correct and that everything is up to date.

This is something that we as financial planners can point out because we talk to our clients on a quarterly basis, if not more. But lawyers don’t have as many points of contact. They may only be in contact every few years when a major issue arises and therefore may not be aware of smaller issues.

There are two cases in particular where consultation with a lawyer is particularly important.

Estate planning: Certainly, clients need an estate planning lawyer to execute wills and trusts to ensure that their estate planning needs are met. But clients may not be aware of other estate planning issues they may have on their hands. Even when a client has taken the necessary estate planning steps, these plans should be updated regularly so that they always reflect their current situation.

In addition, there are a number of estate planning opportunities that we want our clients to pay attention to. With current inheritance and gift tax exemptions of $ 11.58 million set to expire in 2025, we want to work with estate planning lawyers to identify strategies to lock in these high exemptions through lifetime donations. before any change in tax law is made.

Divorce planning: We can also be of service to clients going through a divorce. Considering the current divorce rates in our country, this is a situation we are often faced with.

When lawyers work with clients going through a divorce, their goal is to achieve the best possible settlement for their clients and move them to the next stage in their lives as quickly as possible. But what may seem like a favorable settlement, might not serve a customer well in the long run. We are able to walk through different scenarios to understand the impact this could have on their post-divorce and retirement cash flow.

For example, a client may believe that the award of the family home in the divorce is a victory. But the household can end up being too big a drain on their post-divorce resources. It may be better in the long run to sell the house, divide the proceeds, and use some of those assets to supplement retirement savings.

As advisors, we have a good handle on what’s going on in our clients’ lives, but we don’t know everything. By working hand in hand with our clients’ accountants and lawyers, we can work to achieve a more complete picture and provide our clients with holistic advice.

Securities offered by LPL Financial, member of FINRA / SIPC. Investment advice provided by Private Advisor Group, a registered investment adviser. Private Advisor Group and Bleakley Financial Group are separate entities from LPL Financial. The opinions expressed in this document are for general information only and are not intended to provide specific advice or recommendations to an individual. No strategy ensures success or protects against loss. Bleakley Financial Group and LPL Financial do not provide legal or tax advice or services. Please consult your legal or tax advisor regarding your particular situation.

Director, Bleakley Financial Group

For over 30 years, Andy Schwartz has provided financial planning and wealth management services to clients across the country. As an independent advisor, his advice and support are always personalized and focused on the client’s success. He is the Founder and Director of Bleakley Financial Group, a wealth management firm serving more than $ 5.5 billion in brokerage and client advisory assets.


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