The Value of the Tax Map for Your Clients

Joe Elsasser, CFP®, President of Covisum
August 29, 2019
    

Covisum's software started out as services in my own financial planning practice. We use Tax Clarity® at least once per year with every client, mainly because skipping it just doesn’t make sense. Let me explain our thought process:

We get at least one client referral each year to provide a Tax Map and advice on a tax-efficient retirement. The lifetime value of a client to our practice is over $15,000. It’s a no brainer to spend $960 on software to make that happen.

Tax Clarity

A closer look...

Let’s say that you have 100 clients. Adding a Tax Map review to every single client’s annual review will take you approximately 1,000 minutes (On average, it takes advisors five minutes per client for data entry and five minutes for discussion in the client review). That’s 16.67 hours of your time annually to include a Tax Map review as part of your process for every single client.

Assuming your time in client meetings is worth $1,000 per hour, and your planning/support time is worth $100 an hour, that’s $10,127 of your time committed. Add the cost to license the software and your total investment is about $11,000 to make Tax Clarity a recurring and ongoing part of your practice.

Now, let’s do the math on the lifetime value of a client. Say your average client produces $5,000 of revenue and you retain clients on average for 10 years. Assuming you would expect a 15% return on any investment, your return on investment is still hundreds of percentage points. 

That’s not even counting what you could do if you also use our field-tested seminar for client acquisition (which is included for free with a paid subscription to the software). 

Just for fun, I put together a little spreadsheet so you can plug in your own numbers. The yellow highlights are the inputs. A little math might show you the return on your investment you are looking for. I assure you, it's worth it! 

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Posted by Joe Elsasser, CFP®, President of Covisum
Joe developed Social Security Timing® in 2010 because, as a practicing financial advisor, he couldn’t find a Social Security tool that would help his clients make the best decision about when to elect their benefits. Inspired by the success of Social Security Timing, Joe founded Covisum®, a financial tech company focused on creating a shared vision throughout the financial planning process. In 2016, Covisum introduced Tax Clarity®, which helps financial advisors show their clients the hidden effective marginal income tax rates that can significantly impact cash flow in retirement. In early 2017, Covisum acquired SmartRisk™, software that allows advisors to model “what-if” scenarios with account positions and align a client’s risk tolerance with their portfolio risk. In January of 2019, Covisum launched Income InSight®, an income planning tool that deeply integrates with Covisum's other tools and helps advisors make better financial decisions, faster while resolving conflicts in assumptions and conflicts in results that plague other financial planning tools.