Investors Seek Tax-Efficient Financial Plans in Light of New Tax Law

Shelley Yates, Communications Senior Advisor
March 22, 2018

Affluent American investors have spoken ― taxes are a big deal.

A recent AICPA survey of affluent American investors revealed that:

  • 90 percent believe that effective tax planning is either very or somewhat important to their overall financial well-being in retirement.
  • 87 percent think they would be more likely to reach at least one of their financial goals with a tax-efficient plan.
  • 63 percent were likely to adjust their financial plans to align with tax policy changes.
  • 53 percent said that working with an advisor with substantial tax expertise could make them likelier to meet their financial goals.
  • 43 percent cited “tax efficiency of savings and investment” as a key aspect of a financial plan, second only to “retirement savings and income” (68 percent).

That’s the good news. The “not so good” news is that the AICPA notes that, although affluent Americans recognize the importance of tax efficiency to their financial plan, only 43.5 percent of their total investments are in tax qualified accounts or tax-favored investments.

In response to the findings, Andrea Millar, who serves as Director of the AICPA’s Personal Financial Planning Division said, “Given the sharp bite taxes can take out of returns, the importance of structuring investments and income-generating savings in a tax-efficient manner cannot be overstated. However, taxes have an impact on all aspects of a financial plan, from retirement to medical care to charitable giving. CPA financial planners work with their clients to understand their financial goals and structure their financial plan in a tax-optimized manner accordingly.”

CPA financial planners and financial advisors are uniquely qualified to help their clients in two ways: interpreting the implications of the new tax law and ensuring financial plans remain tax-efficient and focused on growth. There’s no better time than now to talk to your clients about how the new tax law affects them – and their investments.

With the recent tax reform changes, CPA financial advisors will likely be at the intersection of an increasing amount of financial planning and tax-smart investing conversations. 1st Global President David Knoch recently sat down with Michael Cohn, Editor-in-Chief of Accounting Today to discuss the opportunity presented by the new law.

“Generally speaking the tax law changes have created even more conversations between financial advisors and their clients about what it might mean to their saving and investment plans, and what it might mean to their ability to retire,” said Knoch. (Click here to read the full article.)

“Since the financial planning process is something that is continually revisited, at least annually, we should probably be reviewing the plan. It’s what you keep, not what you make, that matters more than anything else in that financial plan, so there’s a strong integration between financial planning and tax planning.”

The CPA financial advisors that 1st Global partners with are called to provide financial planning and advice for two reasons: they enjoy solving complex problems and they enjoy doing good for others. Offering wealth management services to their clients lies at the intersection of this calling. Is your CPA firm ready to answer the call?

What’s the best way to set up a wealth management practice? Click here to learn about our framework for designing the optimal financial services firm.

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