Only 26% of Americans have an estate plan. If you’re thinking, “But my clients are high-net-worth…many more have an estate plan.” Well, the numbers are only slightly better for high-net-worth families, with just over 50% as reported by Think Advisor.
What do these numbers tell us?
These numbers show an opportunity for tax practices to build deeper, meaningful relationships with their clients, helping them to navigate some of life’s most challenging financial decisions. Given that estate planning can overlap with tax planning in ways that encompass many events throughout the life of a client, tax advisors can work with wealth managers and estate attorneys with the goal of creating a comprehensive strategy in the client’s best interest. And you’ll see in our Q&A below, that tax advisors can bring estate planning into the conversation early on in a client relationship.
Three Tips to Improve Life Event Tax Planning
Focusing on tax planning around life events can show the client that your tax firm cares about their goals, potentially resulting in long-term client relationships for your tax practice.
- Go beyond the tax return: Review tax returns, looking for deeper needs a client may have. Ask clients questions about their goals and long-term plans for life. Understanding their plans around family, career, business, retirement, and more can position your tax firm to identify future client planning needs and help them make decisions with their goals in mind.
- Partner with experienced estate attorneys and wealth managers: As a tax advisor, being able to connect clients to and work directly with legal and wealth management resources allows you to solve more holistic client needs. At Harness, we offer tax advisors a community of tax and wealth managers to help address client needs.
- Focus on your ideal client: By understanding the needs of your ideal client, you can equip yourself and your tax firm’s team with the knowledge and resources to plan for the life events of your clients. For example, if you serve startup founders and employees primarily between the ages of 25 to 45, in addition to helping them navigate business tax planning such as employee equity and business formation, you can focus on addressing the personal needs of clients who may be starting families, creating estate plans, saving for their children’s education, and more.
With those tips in mind, next, we’ll hear from Harness tax advisor Neil Johnson about how he’s leveraged life event planning to grow his firm and help clients plan for the future.
Q&A: Life Event Tax Planning with Neil Johnson
“My goal is to be a client’s first resource when a life event is on the horizon.”
– Neil Johnson
Neil Johnson is a client of Harness and is not being directly compensated for sharing his opinion and experience with our firm. Due to Mr. Johnson’s relationship with Harness as a tax advisor on the platform, material conflicts of interest may arise. There is an indirect financial incentive for Mr. Johnson to promote Harness as he is a tax advisor available through the Harness platform. Mr. Johnson’s comments may not be representative of any other person’s experience with the firm.
Harness: Tell us about your tax advisory experience.
Neil: Before partnering with Harness, I owned a fully remote tax and accounting practice. Prior to starting my practice, I was a partner with a Chicago-area CPA firm.
At this point in my career, my ideal client base is seasoned startup founders who may be on their second or third startup venture or investors in startups who need comprehensive tax planning and compliance assistance. On my client’s behalf, I collaborate with their financial planners and attorneys to provide complete and comprehensive life planning services. My goal is to be a client’s first resource when a life event is on the horizon.
Harness: Do you specialize in any tax services based on life events?
Neil: Early in my career I was fortunate enough to get tons of exposure to personal financial planning, trusts, and estates. As time went on and my clients were going through various life events, I opted to get some training in divorce matters. I now hold a CDFA (Certified Divorce Financial Analyst) designation.
The interesting part of divorce is how similar it can be to estate planning in terms of collecting information regarding a married couple or decedent’s assets, liabilities and how to distribute a marital or life estate. It also takes empathy, given it’s an emotionally difficult situation. At the same time, advisors need to provide clear, concise, and steadfast direction during those difficult times.
Other than the CDFA designation, my practice does not specialize in any specific life event planning, but I have found that accumulating experience across life events has helped me build long-lasting client relationships for my ideal client base.
Harness: What recommendations do you have for tax firms looking to better serve their clients around life events?
Neil: I have the fortune of having over thirty-five years of experience, so there isn’t much I haven’t encountered before. The biggest recommendation I’d give around life event planning is knowing what you don’t know and understanding where and how to get solutions and answers. For example, a savvy advisor should know how to read and review a tax return with an eye not only for tax efficiencies but other ways to improve a client’s financial situation. This takes practice.
Our profession has mostly placed itself in a box when it comes to providing tax services. Many feel the mission ends after preparing a complete and accurate tax return. So another recommendation I’d give is to go beyond the tax return. Engaging clients with discussions about lifestyles and life events shows them you are not only providing quality tax preparation services but also looking at the bigger picture. This is a value-added service for clients and leads to advisory services that expand beyond simply preparing tax returns.
Harness: Is there a certain age at which you typically discuss estate planning with clients?
Neil: Estate planning is an ongoing process, and planning for age groups no longer follows traditional rules of thumb. People are getting married and starting families later than a generation or two ago, and life expectancies are getting longer.
Estate planning really starts when a person begins their career. This individual may be unmarried, but they participate in their employer’s 401(k) plan where one of the 401(k) participation form questions is naming a beneficiary. As time goes on, things change. This same individual gets married and starts a family, which is probably a good time to consider drafting a will, even if there isn’t a significant accumulation of assets. Wills consider more than how to distribute a decedent’s estate, such as what to do with their remains (burial, cremation, etc.) or who will be the custodian of his or her minor children.
Engaging clients in these conversations shows that you are looking out for the best interest of your clients. Clients can feel and sense these conversations’ value, making them more sticky to your tax practice over the long term.
Harness Provides a Platform to Meet Your Client’s Needs
If your tax practice is looking to modernize the way you serve clients, Harness has the tech and the people to help you. The Harness platform brings together four key areas to offer not only tax practice management software but also the administrative resources you need to help your firm grow and serve clients’ lifelong needs.
- Curated client introductions – With the goal of maximizing your firm’s profits, Harness pairs you with tax clients whose needs align with your interests and areas of expertise.
- Time-saving tech – From a secure client portal to client engagement templates to automated task updates, the Harness platform provides your firm with a modern, seamless tax advisory client experience.
- Concierge support – From onboarding to client servicing to billing support, our Concierge team enables you and your clients to accomplish more together, faster.
- Advisor community – With continuing education, a practice coach, and a community of like-minded peers, the Harness tax community is designed to help you grow professionally.
Set up an intro with Harness today.
Tax related services provided through Harness Tax LLC. Harness Tax LLC is affiliated with Harness Wealth Advisers LLC, collectively referred to as “Harness”. Harness Wealth Advisers LLC is a paid promoter, internet registered investment adviser. This blog should not be considered tax or legal advice and is provided for informational purposes only.
Harness cannot guarantee future results. An advisor’s past performance may not be indicative of future results. Not all advisors have the same skills, knowledge or expertise, including those that have certain credentials. Content should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of Mr. Johnson as of the date of publication and are subject to change.
As noted above, this blog contains an endorsement from a tax advisor who provides services through the Harness platform. This presents a conflict of interest as there is an indirect financial incentive for a tax advisor to promote Harness’s platform. The tax advisor’s comments may not be representative of any other tax advisor’s experience with the firm.
Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual results may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.
