Many financial advisors stick in their lane. They provide timely advice regarding investment opportunities, retirement account management, Social Security options, life insurance, legacy planning and philanthropic guidance. Yet there’s one area where affluent clients would really love their advisors to provide insight but most financial advisors come up short: Tax planning.

In fact, a recent Spectrem Group survey of 1,168 investors (net worth between $100K and $25 million, excluding primary residence) revealed that 92% of respondents expect to receive tax planning advice from their advisors, while only 25% receive it. Now if that isn’t a huge opportunity for ambitious advisors to bring in new clients, we don’t know what is!

The biggest hurdles? Lack of tax planning expertise and time

It’s easy to understand why advisors avoid dipping their toes into tax planning waters. Most advisors aren’t CPAs, and they don’t have a deep understanding of taxes or the ever-changing tax laws. The thought of analyzing dozens of pages of tax documents when you don’t have the know-how (or luxury of spare time) can be daunting.

Clearly, the vast majority of advisors are missing the boat when it comes to delivering the tax planning advice clients want. Still, some advisors—those serving the 25% who are receiving the tax planning advice they want—have figured out how to fulfill their clients’ wishes. What’s their secret?

Thousands of advisors have tapped into FinTech solutions like Holistiplan to simplify the tax planning conversation. Holistiplan is easy to use. You just upload the client’s tax return—and in less than a minute—the software produces a full report with talking points to guide the advisor’s conversation with the client.

How FinTech helps give advisors the tax planning edge clients need

During a recent episode of the Breakthrough Advisor Podcast, InsurMark Virtual CMO Jack Martin asked Holistiplan Chief Growth Officer Chris Field how his company is helping advisors bridge the service gap by making tax planning comprehensive, efficient and easily scalable. The two also discussed how client expectations and the financial industry are changing, as well as what advisors need to do to meet client needs. Following are a few highlights from their conversation.

FinTech streamlines tax planning conversations (and client acquisition) for advisors …

JACK MARTIN: The number one thing keeping our advisors awake at night is meeting client expectations, while the second biggest concern is client acquisition. How are advisors using tax planning (a top client expectation) to help close the gap on client acquisition?

CHRIS FIELD: If you look at the Spectrem Group study and others, there’s a real clear communication from clients: “I’m worried about taxes. I need someone to help me demystify taxes because every year I know what I made and I know what I paid, but I have no idea what happens between those two.”

With Holistiplan, the advisor can grab a tax return, upload it, and in less than a minute, they’ve got a conversation with full reports they can have with their client. They don’t have to go read a thousand tax returns manually to be able to do that. Immediately, they’re on the same page as somebody who’s read tax returns for 10 or 15 years.

Why clients can’t rely on CPAs for tax planning insight …

JM: What about the clients’ CPAs? Why are clients looking to advisors to fill in the gap on tax planning, not their CPAs?

CF: The CPA’s job is not tax education. Their job is making sure taxes are accurate, right? Clients want advisors to look forward and say, “This is what happened in the past and that is relevant. But what matters more is what are you going to do this year and the next year and next decade, so you’re not overpaying taxes?”

Almost no CPAs are doing that, so there’s this interesting opportunity for advisors to sit in that driver’s seat and to talk about tax optimization and tax planning. And when you use that in lead gen and in meetings to close a new family using a sample tax report—when you demystify taxes—you’re already 10 steps ahead of everybody else.

Client expectations and the industry have changed. Advisors need to engage on a deeper level …

JM: You’re on the ground with a lot of advisors, in conferences and other events. What are you hearing from those advisors about FinTech beyond just Holistiplan? What are they talking about with respect to their practices about how they’re taking it to the next level?

CF: The biggest thing we’re hearing is that what used to be a space where you could really do investment management only and be successful, that seems to be changing. There’s this real impetus that the planning side of financial planning is really becoming important to the client, especially people with worth, people with resources, the higher net worth clients.

There’s this feeling that there’s plenty of information out there around investments but there’s not enough information on or around the whole financial picture. Clients don’t want to go to seven different places to get the whole picture (CPA, insurance agent, banker, estate planner, investment advisor, etc.). They need a quarterback who understands how all those pieces fit together.

For clients, it’s all about self-preservation. They believe they’re doing what’s best but what if all of those things are disconnected? What if this professional isn’t aware of something the other one knows? Financial advisors need to be more in the know and understand, even if they’re not executing the strategy, they need to be guiding the conversations.

They need to be engaging people on a deeper level. I think a huge reason why Holistiplan has been so successful is there are a lot of advisors who have never done any “planning,” and as they realized how critical planning is, we were the lowest barrier to entry for them.

We had one client who said technology software has historically been like telescopes. Holistiplan has been a microscope. I really loved that juxtaposition because that’s the difference between 30 years of strategic planning, which is very much just wait and trust me, versus what can we do today? For clients who are constantly saying, “What have you done for me lately?” that tactical planning—that microscope—is so, so valuable. That’s what we’re hearing more of, and that’s the movement we’ve seen inside broker dealers and other places, like InsurMark.

Taxes are the No. 1 expense for retirees. Advisors need to shift from looking back to looking forward …

JM: Many aspects of our planning have been locked on that rear view mirror and not really looking forward like they should. I know our advisors love what we’re doing with index strategies. And we’ve learned over the last three years that being a slave to history is not really worth a lot. What’s really worth more is the ability to work from capital market forecasts and look at how your index and your product are going to work going forward.

I love what you’re saying about how we can look forward in the tax realm as well. So, it’s not just, we’re going to get you $100,000 a year in guaranteed income for the rest of your life, but we’re going to get you a net after-tax amount of guaranteed income that looks like this. That’s really powerful.

CF: Yes, taxes are the number one expense of retirees. Once people have historically finished paying their mortgage, taxes are their largest monthly expense, even in retirement. So, to be able to say that sentence to someone, “Hey, Mr. Martin, taxes will be your number one largest expense in retirement. I want to help you forecast over the next 20 years to make sure we’ve minimized that impact as much as possible.”

No one’s going to say, “That’s okay, I’m fine. Thank you. I love giving extra money to the IRS.” It doesn’t matter what their political affiliation is or whether they have millions or tens of thousands. Everyone wants to pay their fair share and not more. This really is a universally applicable conversation, and I think that’s why it resonates so much. Very few topics touch everyone. Taxes are in that group. And by the way, it’s every year. Tax law changes constantly.

Looking for more tax planning insight? Our recent blog, The Make or Break Tax Talk Clients Need Now, is a must read.

Tax planning is just one aspect of FinTech that ambitious advisors can use to level up

InsurMark prides itself on partnering with product and solution providers that help advisors close the gap on client acquisition and maximize opportunities to grow their practices. Holistiplan is one of the many FinTech solutions we’re excited about. Advisors and financial professionals can count on us to connect them with the comprehensive suite of FinTech solutions they need to come out on top.

To learn more about the FinTech tools and other resources InsurMark recommends, contact us at (800) 752-0207 or connect with us online.

As an ADO – Advisor Development Organization™, InsurMark provides solutions to meet the ever-evolving needs of financial professionals with a mission to protect and enhance the financial security of every home in America.