Financial advisors and tax professionals often have different areas of expertise. So while there’s certainly some overlap between these two professions, they’re nonetheless quite different. However, there are still many cases where financial advisors help their clients with tax planning, including assisting clients with filing their tax returns. Here’s what to know about financial advisors and their relationship to taxes.
Working with a Financial Advisor Who Offers Tax Planning Services
If you want to work with a financial advisor to help with tax planning, you should ensure they have the appropriate credentials. Most financial advisors who help their clients with tax planning services possess CFP® Professional (CERTIFIED FINANCIAL PLANNER®) or CPA (Certified Public Accountant) designations, indicating they have the required training and experience to provide guidance. Please keep in mind that while LPL Financial advisors can help with tax planning, this does not include tax services or advice.
The convenience element is the benefit of working with your financial advisor. However, depending on your situation, you may want to work with a financial professional specializing in taxes. For example, if you have a complicated financial situation that requires in-depth understanding, you’ll want to work with a professional who can meet your needs.
Taxes and Financial Planning
One area where financial advisors shine when it comes to taxes planning is financial planning.
Everyone pays taxes, but those taxes impact everyone’s financial circumstances differently. A financial advisor can help you understand how your specific tax situation will affect your finances.
For example, contributions to a pre-tax investment plan could potentially reduce your taxable income when it comes time to file. Specific strategies for selling investments can also help you mitigate high tax payments.
Working with a financial advisor on your tax plan can potentially increase your savings and contribute to a more stable retirement. On the other hand, if you don’t have a tax plan, you could be leaving money on the table—sometimes, more than you can imagine!
Financial Advisor Tax Certifications
Aside from the CPA and CFP® Professional certifications already mentioned, there are other ways financial advisors can earn licensure to provide appropriate tax planning guidance. One way is getting a license from the National Association of Certified Public Bookkeepers. A license through them demonstrates:
- Industry knowledge
- Appropriate experience
- Dedication to conducting work with integrity
Some financial advisors can also become enrolled agents with the IRS. This grants them the right to represent their taxpaying clients to the government and shows they have a high level of tax-related knowledge.
Tax Planning Services from Financial Advisors
When you work with a financial advisor for tax planning services, their primary duty is to help you formulate a plan for using that money. Financial advisors include the tax return in your financial plan to help you work toward your financial goals. However, before doing so, they build relationships with their clients, getting to know them and their financial situations to set appropriate financial targets and create realistic goals.
When Financial Advisors Work with Tax Professionals
Another way financial advisors help their clients with tax planning is by working with a dedicated tax professional. While the tax professional helps prepare the return, the financial advisor helps create a plan for incorporating that return into your financial strategy.
Depending on your situation and what’s most appropriate for you, the return can help you pay off debts, purchase a home, contribute to your retirement, or take other actions that help you work toward your financial and lifestyle goals.
It’s Tax Season! Get Started Today with a Financial Advisor
You shouldn’t procrastinate with your finances, especially regarding taxes. The sooner you get started, the better off you’ll be. The financial advisors at Good Life Financial in Mt. Pleasant can help you incorporate your tax return into your larger financial goals, and provide guidance on how to put that money to work. Working with us starts with a free, no-strings-attached discovery call that lets you learn more about who we are and what we do. Contact us today to get started!
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.