The views presented here do not necessarily represent those of Advisor Perspectives.
Adding tax management services to your practice calls for more than an assessment of potential revenues and client interest. Tax management introduces new compliance demands and sometimes complex business management needs that might not be right for every firm.
Alex Caswell, wealth planner, founder and CEO of Wealth Script Advisors, is currently deciding whether his practice will offer tax filing and preparation in-house. Wealth Script Advisors, which works with both high earners and high-net-worth clients, already offers tax planning, which he says has been a “critical value add and growth engine” for the firm.
“We’ve been doing a lot of research on [adding tax management] and talking to other advisors who offer it,” he said of the steps currently being taken.
“Most of my clients are really high W-2 income earners and frustrated with their taxes in one way or another. We collect their 1040s and analyze them ourselves. We have a process where we take them through the easiest tax reduction strategies to the most complex ones. We can also connect them with tax management firms for more complex tax reduction strategies. It’s not CPAs [we’re connecting them with], it’s usually some form of special investment firms or entities,” Caswell added.
Compliance and Liability Risk
To determine if in-house tax filing and preparation is the right next step for his firm, Caswell has focused on three main points.
“In not offering the service, will I lose some existing clients? If we add it, will I get clients that I usually wouldn’t? And based on the actual revenue, is it worth the cost or headache?” he shared.
Before launching Wealth Script Advisors last year, Caswell worked at a small boutique firm where he was responsible for launching tax planning as part of their service offerings.
He is currently leaning against offering a full-fledged tax management service at his firm.
“From everything I’m hearing and reading, people are raising such red flags about it. My concern is, if we saddle ourselves with this additional work, there could be compliance and liability issues,” Caswell said.
“As far as tax planning goes, however, I think every single advisor should have an element of tax planning in their practice. Almost every aspect of financial planning touches some sort of tax ramification. It’s incredibly important to understand, or you are missing a large part of the picture,” he noted.
Advisors who are considering adding a tax management offering should first determine: “Are you trying to reach for too much to provide value, because you want the (client) to perceive you as a one-stop shop?” Caswell said.
“Is it really going to deliver a better client experience? That is a very personal question for the advisor or team to answer,” Caswell added. “For instance, if you are working with clients like business owners, business taxes are incredibly complex,” so your decision may also be influenced by your client focus or speciality area, he pointed out.
Tax Help For Big Picture Planning
Scott Bishop, partner and managing director at Presidio Wealth Partners, said in an email to Advisor Perspectives that tax management “is not about preparing tax returns — it’s about helping clients make better financial decisions throughout their lives with taxes in mind.”
“That distinction is important, and it’s often where advisors can add the most value without stepping into tax compliance,” Bishop added.
“We do not prepare tax returns for clients. Instead, we work very closely with our clients and their CPAs to address tax planning holistically and proactively. As clients’ wealth grows, taxes become one of the largest controllable expenses they face, and advisors are uniquely positioned to help manage that complexity across investments, retirement, estate planning, and charitable strategies,” Bishop wrote.
This firm’s tax planning work includes a range of services, including coordinating estate planning strategies, structuring charitable giving, and addressing investment-related tax decisions such as Roth IRA planning, required minimum distributions (RMDs), and qualified charitable distributions (QCDs), he shared.
“A major focus is what we call ‘tax placement’—being intentional about what types of assets clients own in which types of accounts (taxable, tax-deferred, and tax-free). Over time, that coordination can meaningfully improve after-tax outcomes,” Bishop noted.
A recent BlackRock survey of more than 1,000 U.S. financial advisors found that taxes are one of the most significant issues for high-net-worth investors, with 92% of clients requesting this type of guidance from their advisor.
“For advisors considering whether tax management is a service they should offer, the key question isn’t ‘Should I become a tax preparer?’ but rather, ‘Can I integrate tax awareness into every planning conversation?’” Bishop shared.
“If you already advise on retirement income, investment allocation, charitable giving, or estate planning, you’re likely touching taxes whether you intend to or not. The opportunity is to do so intentionally, collaboratively, and within your scope of expertise,” he wrote.
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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The views presented here do not necessarily represent those of Advisor Perspectives.