Your job is to provide financial advice to clients. Your work is important and helpful but showing clients the value of your advice is a critical differentiator between you and the rest of the financial service providers. Good financial planning software includes visuals that make challenging concepts feel straightforward. Using Tax Clarity® and Income InSight® in your annual client meetings can give you the edge you need.
When preparing for a client review, most advisors start by reviewing the client’s different income streams and account balances relative to their goals and updating their account balances. (This process is automated if you use RedTail or TD Ameritrade.) Next, update any changes to their goals, like their spending level. When you review their new account balances, are they still on track to reach their goals, even in a less-than-ideal environment?
Income InSight stress tests the client's strategy, so you can quickly see if common retirement stressors like high inflation, a down market, an early death, a long-term care need, or cuts to their Social Security benefits will derail their retirement plans. Review the stress test icons at the top of the results screen. A green icon indicates that your clients will reach their goals even if these events materialize. A red icon means you need to do some additional planning.
It's also essential to revisit the overall income strategy every year since account balances change due to market fluctuations, withdrawals or contributions, extra income from part-time or consulting work, or several other factors. Changes to income can move the thresholds as you consider when and how much to convert to a Roth. Once you've determined your lifetime Roth conversion strategy, show the impact. The software saves you hours by doing this automatically. Income InSight evaluates how much your client would pay in taxes now versus how much they would pay in taxes later. The figures are displayed in the estate value or portfolio longevity metrics and demonstrate the value of your services–in dollars!
Navigate from multi-year Tax Maps in Income InSight into Tax Clarity for deeper Tax Map analysis for the current year. Use Tax Clarity during every annual client review meeting to calculate your client's effective marginal tax rate and avoid potential pitfalls, like entering a new bracket, creating a Social Security tax, or creating unnecessary Medicare expenses. It's imperative to run a tax analysis in Tax Clarity annually since the tax landscape changes every year. For example, in some years, the client may have capital gains or capital losses, consulting income, or unexpected withdrawals–which impacts the tax strategy for the year. However, you don't need to create a new case every year. Tax Clarity runs on the underlying data used for Income InSight. Click the details [$] button next to the current year Tax Map in Income InSight and "add to Tax Clarity." The projected tax details will migrate, so you only have to update a few key figures.
The Tax Map is a great visual for clients. The effective marginal tax rate (the tax rate paid on each additional dollar of income) is shown in gray, and the regular tax brackets are displayed in red. The Tax Map also illustrates IRMAA penalties for Medicare parts B and D, and Social Security benefits that have become taxable based on the provisional income formula. So, you can help them visualize ugly interactions between different income streams and help them understand the value you deliver by avoiding them.
Plus, you can generate a client-friendly PDF report that outlines everything you discussed in the meeting with the click of a button. To do so, follow the steps below.
- Log into the portal.
- Select a client.
- Click Income InSight.
- Click on the "Generate PDF" button in the upper right-hand corner of the screen.
- Name your report and click the "Generate" button.
As you schedule your annual client meetings, consider adding Tax Clarity and Income InSight to your process. The software saves you time and helps you clearly demonstrate the value of your financial advice. Start your 10-day free trial today, no credit card or commitment required.