While this time of year can be a busy one for advisors and clients alike, it’s important for advisors to take a closer look at where clients are likely to end the year from a tax perspective. You won’t be able to take advantage of these opportunities after Dec. 31.
Calculate your client's effective marginal tax rate and identify dangerous points where just one additional dollar of income can push clients into much higher effective marginal tax rates. Clients often don’t understand the relationship between ordinary and capital incomes, leading to potentially significant tax inefficiency in their retirement strategy. Use Tax Clarity® during every annual client review meeting to look at the tax landscape for any given year without creating a new case.
"Harvesting gains or losses, minding phantom capital gains, and determining at which point you’ll want to do a Roth conversion this year are going to add enormous value to your clients, but presenting these opportunities can also help you grow your financial planning practice. You can grow your practice by effectively communicating the value that this tax-efficient retirement advice adds. Clearly show your clients your value as an advisor by taking advantage of these opportunities to add dollars to their retirement plans."
Hidden Value is a column in ThinkAdvisor where Joe Elsasser, CFP®, answers common questions with insights that advisors and their clients may not have considered. This week, Joe discusses year-end tax opportunities. Read the ThinkAdvisor article in its entirety.
Financial advisors can add significant value to their services by helping clients navigate the complexities of taxes in retirement. To talk taxes with clients, you don’t have to know all of the complicated interactions between different tax provisions and different types of income. Quickly identify sub-optimal situations, and show clients how to make retirement decisions in the most tax-efficient way with the latest version of Tax Clarity®.
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