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Transcript32 lines
- [00:00]
Steven Jarvis
Foreign.
- [00:09]
Dave
What is up?
- [00:10]
Ann
And welcome back, everyone, to another episode of the Practical Planner podcast. You got me and Ann and Dave, the whole team here, but we also have Steven Jarvis here. I'm sure everybody, if you are just. I think if you're listening to this podcast, you have to know who Steven Jarvis is. He's a, you know, great content creator, great in the tax base, works with financial advisors, kind of helping their clients get taxes done, do tax planning, etc. So, Stephen, thanks for joining us today, even though you're at a conference.
- [00:37]
Steven Jarvis
Yeah, super excited to be here. If I only recorded podcasts when I was at home, I wouldn't get nearly as many of them done. So, yeah, that doesn't matter. I'm in Columbus today as we record this, getting ready for an FPA symposium. So, always excited to be able to get in front of advisors, talk about how they can help their clients.
- [00:53]
Ann
Love it, love it. And I'm really excited for today's topic because I don't know if we could have a better team to talk about what we're going to talk about. So I think in the financial planning world, um, especially if you come from broker dealer world, wirehouse world, like, you are extremely scared of two things. One of them is the word tax and talking about tax. The other one is talking about things that have to do with legal, right? And that's estate planning in the world that we're in. And, you know, I think a lot of my job when I talk to other advisors is like, helping them realize that when you're at a really big firm, they don't want to risk anything for you. Right? You're a big firm, you're one advisor. They honestly could care less whether you're there 10 years from, from now. They just want to make sure you don't ruin their firm. Right? And so when they think about tax and legal, they know that there's, you know, advisors can go to way wrong areas, lead their clients into a bad spot, and that can lead to issues of their firm. And so instead of like this being the line in the middle that you can't cross, they're like, let's take 100 steps away from there. So you're not even close to having any issues. And so I think that, you know, when we, a lot of probably the people listening here are more independent, more RIA world. And I think when as advisors get there, there's a lot of learning about what can we do, what can't we do? How do we best help clients? And so you Know, when you think about, you know, an advisor's role and what to do and how. How do they talk tax and legal without crossing that line?
- [02:23]
Steven Jarvis
Yeah, it's a really good question and one I get all the time. I'm sure you guys get to navigate it quite often as well. And so the first thing I like to on this topic is just a reminder to every financial advisor out there, you already do tax planning. It's just that some of you are intentional about it and the rest of you are a compliance risk. And that might sound kind of backwards because you probably think of Thomas to your point, especially depending on your background, you're probably thinking, oh, I'm a compliance risk. If I really aggressively talk about taxes all the time, if I'm helping my. My clients move to Puerto Rico, which, that's a whole different thing. And maybe you are a compliance risk, but for most, for most advisors, they just, they forget that every money movement has a tax impact. And so we have to keep that front and center, especially as the CPA world continues to get more and more compressed for resources. A lot more pressure on preparers and things like that. Not excusing some, maybe some of the lack of capacity or help that goes on and just acknowledging a reality that more and more clients are going to be turning, and rightfully so, they're going to be turning to the people who help them with the rest of their money decisions to say, hey, wait, all those decisions you helped me with had an impact on my tax return. I expect that you're going to help me make sure it got reported to the IRS correctly.
- [03:38]
Ann
And I think that's like the base level too, right? Like, I actually, right before this call, was meeting with a CPA of one of my clients I work with. You know, he's one of six partners at a pretty big, you know, consulting firm. I work with three of them now. And the CPA is like, you know, how do you work with clients? And I was kind of walking through what we do, you know, how things we help handle. And he's like, that's insane. He goes, every other financial advisor we work with, they don't do anything with tax. He's like, they manage their investments. They don't do any financial planning, they don't do any tax planning. And they don't even relay to us the tax impacts of anything they're doing. So they might have capital gains realized, they might have Roth conversions. And one, they're not relaying it, which is an issue. Two, if you're not relaying it. Your clients barely know what documents to give to their cpa. And so it's not on their return. Then you're not reviewing their return. So then you don't know that there's issues with the return. But, like, that is, to me, like the most base level of what tax planning is. Right. Like, I think in, in our world, we still look at, if you can talk about Roth conversions, you are an A plus tax planning advisor. And I think that's like the biggest. That's like the smallest level of what tax planning actually looks like in the real world. And what happens is you have clients and they say, here's my tax team, and they file, right? And then there's your financial planners, and they don't talk tax planning. And then you have your estate planner who's over there and maybe doesn't even know a lot about what's happening in your financial life. And so there's these massive gaps. And I think the way that we win as financial advisors is we, we fill those gaps, right? We do the real tax planning. We do relay things with, you know, the cpa. We're doing their projections, we're making sure they make their quarterly estimates. We're making sure they avoid safe har under withholding penalties, make sure they know what they're going to owe above it. Like, there's just so much in this world of tax planning, and people are scared of getting involved in it. And I think one, expertise is a big reason, right? If you don't have the expertise, it's going to be hard to do this. But two, they're worried about the advice side of things, like, how do I only do planning? How do I not do advice? And, you know, I'm curious from you, you know, is this really just because of E and O insurance? Because that's the world of what I've heard. Because I know, like, some of my clients work with tax people who have no licensing, right? You can file, you can give the advice. So, like, where's this huge issue for advisors that they're so worried about if technically you don't need licensing to do it?
- [05:58]
Steven Jarvis
Yeah, it's a really good question on the background where this comes from. So I think a lot of it is perception and kind of misunderstanding terminology because the IRS has some very aggressive language around who can and cannot represent people in front of the irs. And so there's a couple of terms that really get conflated when we talk about tax advice. Because I think for a lot of advisors, they think tax advice and they think it's this huge umbrella that covers just about any utterance of the word tax. And it's really not. As far as the IRS is concerned, the things that only CPAs and enrolled agents can do is actually incredibly narrow and not something that most advisors are at risk of ever crossing the line on. And so what I talk to advisors about is, hey, you really need to clearly avoid giving opinions on subjective areas or on new tax code. Like those are. Yeah, please avoid those. Do not talk to the IRS on your client's behalf. Please avoid that. Like you don't want. If there are actual legal proceedings going on. Yeah, please tag in the attorney. Like, there are some really clear areas where you would have to be foolish as an advisor to wade into those. But there's this huge gap between that and doing nothing, which is what a lot of advisors do now that we can really cut into. And one of the kind of mindset shifts I try to work with advisors on is that we need to get away from this throwaway line of, oh, but check with your cpa. Because most people. For most people, it is a throwaway line. They feel like it covers their back somehow. And they're really. A lot of times when it gets said there hasn't been a lot of work done, there's like, oh, sorry, Thomas, I can't give tax advice, or go check with your cpa. It'll be fine. And what I would love to change that to is, let me help you check with your cpa.
- [07:42]
Ann
Totally.
- [07:43]
Steven Jarvis
Because the advisor should be actively involved and the advisor should still rely on the expert. When I talk about advisors getting more involved in tax planning, I'm not encouraging them to cut the CPA out entirely. Use experts, use tax attorneys. Use the people who can go all the way to the finish line, but do more to get that handoff, to get that collaboration, to have that involvement. I mean, Thomas, you were just talking about working with clients, CPAs. I mean, I have several dozen advisors that I work alongside that we're doing taxes together. And it's a win for everybody involved. It makes my life easier as the tax preparer. It makes the client's outcomes way better. And honestly, the advisor's life is way better too. Because if I'm working with the advisor, I am. Every single time, if something doesn't look quite right, I'm going to talk to the advisor before I tell the client the advisor did something wrong. Because most of the time, there's just context missing. But for most tax preparers, if you're not if you don't have that active relationship. I promise the advisor is the one getting blamed every single time.
- [08:41]
Ann
Yeah, and I don't think you really have much of an excuse for not at least knowing the, the tax team. One, you should have your client's tax return. You know, what's the tax team they work with, right? Clear as day. You ask your client, hey, I'd love to get connected to your tax person. I just want to have a 10, 15 minute call, make sure they know who I am and that I can help them on X, Y and Z. And all my clients know two things. One, we get in a sharing agreement with the CPA and the client, we can all share info without having anything need to be approved. We, we talk in the background, we speed up time for them. And two, any tax related questions, email us both on the same email. I will be the first one to respond. Because I don't have 500 clients, right. I have a hundred higher fee households. So I can spend a lot of time, you know, being available. And I'll tell you if your tax team should have to answer that or if, if we can answer it right. And I think advisors could probably do that a lot more. Like the sharing agreements, right? Like you just bundle everything together, send to your CPA, like the CPAs of my clients, like hey, you know, do you perfect example last week was like, hey, you know, you didn't have any documents with any interest on it. And my client was like, oh, I don't think I have any. I was like, you have a $400,000 account that's getting interest. You definitely do. And he's like, oh yeah, you're right, like great, like info. But as an advisor, when you have all of the clients info in one spot, you know your financial planning software, you can answer any question about documents that are needed for your clients as well.
- [10:06]
Thomas
I would jump in and just say anything that we're talking about here that has to do with a CPA or a tax attorney. On the estate planning side, you could actually map this out and say basically exactly the same. But about the estate planning attorney, you never know what entry point the client has into starting to build that trusted advisor's network that they have. And if you think of those three pillars and Thomas, I love how you laid this out, but it's your financial planning, your legal advisor and then your tax advisor, however that looks right for that person. You never know kind of where they came in. But pretty soon you know, if they have like somewhat of a complex you know, financial situation or, or they just like, being well advised. You bet they're going to start filling out those seats, you know, of like in every single one of those pillars. And where, you know, we get this question all the time because wealth.com is such a comprehensive platform, right? We get the question of like, but where does me as a financial advisor, you know, how do I know the boundary between what I should be doing versus what, you know, a lawyer or CPA should be doing? And it's like, there are some pretty core, you know, areas that each of those three verticals, like, should be fulfilling. Right? So an attorney should probably not be giving advice on movements of the markets and rates of return and whatnot. And doing cash flow analyses, like, that would be a waste of billables. But as an attorney, you know, drafting the document if you need a grant or if you need, you know, whatever, that's, that's clearly within my purview. And then, you know, the CPA taking filing positions, you know, for returns, et cetera, and preparing those returns. But as you said, Thomas, there is so much gray area between those pillars that you, as a financial advisor can be so much more effective if you just even understand, like, where those boundaries are and you start kind of exploring them and understanding, you know. And so I think to this point, Steven, you know, maybe you want to talk a little bit about how to keep yourself, like, edgy, educated, you know, knowledgeable, what, what resources you usually, you know, see well advised advisors seek out.
- [12:21]
Steven Jarvis
I selfishly, I'm a huge fan of podcasts. I think it's a great way to, to, to, to hear, to hear from people who are doing this all the time. Which for I, I would assume that people listening to this podcast are already a little bit more on the proactive side of, hey, I want to be out there, I want to be learning, I want to be. No, I want to know what the best things to be doing are. Where I see advisors take that even a step further is the people they surround themselves with and the people they can call and ask questions that friends, peers, conferences, they go to. One of my favorite recommendations that I've ever heard from an advisor about conferences is that, hey, when you, anytime you go to an in person event, you should go with just a couple of questions where you're going to ask every single attendee there, because that's why I love Thomas. I really appreciate that you're describing specific client situations because I think where there's a big gap sometimes is okay. But what about the Exception. And even though the exception is just that, it's the exception, that's still what hangs us up from getting started. And so if you're worried about, I heard Thomas talk about that information sharing agreement, but I'm not sure what's going to happen when I emailed the CPA or when I asked the cpa, what does that language need to look like? So great. The next conference you go to every advisor you talk to instead of asking them about their favorite sports team, which maybe that's not the best analogy as David has jerseys behind his camera here. But instead of asking about your favorite sports team, ask every single advisor you meet, hey, how are you actually getting tax returns from your clients? How are you making that easy for their CPAs to share those tax returns? And you're going to learn things from people who are really doing this about how this stuff works and not just what Google or Chat GPT is going to spit out at you.
- [13:56]
Ann
Yeah. And I think the thing that I would say is in, in our process, one of our meetings per year is, is tax review. So we review last year's return, make sure there's no mistakes, make sure we explain to you what happened, we map out this year's taxes, you know, safe harbor, what your estimate above it, what moves we're going to make. Like that's mid year. And so we won't meet with you until we have the return. It is that simple. Right. And I think a lot of advisors, they're like, oh my gosh, how do you get client info? And like in our onboarding process with us, our clients, we will. You can't book a time on my calendar to meet with me until we have everything of every piece of info from you. And so when you're the advisor and you're like, oh my gosh, I need this client. I don't want to make their life hard on them. You know, I don't want to ask them for anything. I just want to get you a call. You're actually hurting the level of service you can do. Right. So you might lose clients because you're not providing enough advice when really it's because you didn't have a set process to guarantee you got the info to actually give it good advice. And so I think, you know, a lot of this comes down to an advisor of like, how do you have a right process? How do you show that you believe in this process and all your clients follow it for X reason? Because as soon as you change things for one client, you go from like, hey, I lead this and I'm really good at what I do till I'm just your order taker. Right. And like the way that you trust somebody is very different when you view them as an order taker versus like this is the person helping guide me through everything. And I know that they know what they're doing. It's so different.
- [15:17]
Thomas
And let me tell you, the CPA and the attorney who are seeing like an advisor who is being proactive, who, you know, knows the extent of what they know and kind of, you know, tries to liaise between you and the client. As an attorney, I appreciate that because I can't necessarily Bill, when that email comes in from the client, I'll be perfectly honest. Right. Like the client is asking a very basic question about their estate plan. They don't understand something and it has a tax component to it or something like that, or CA flow component and that. And that advisor picks up that email, you know, sends out the like five minute, you know, or maybe not even five minutes, honestly, like two minute reply. I couldn't have billed for that time. I wouldn't even know how to like put it into my, you know, billable software. And so, you know, that's where you really bring a lot of value to your client.
- [16:12]
Ann
Yeah. And Steven, so before this we were talking a little bit about like where you see advisors actually getting in trouble around tax planning or tax advice. I want you to dive into a little bit of that. So. So people can hear.
- [16:27]
Steven Jarvis
Yeah. So thankfully I screen pretty heavily the advisors I work with directly. And so I feel like I work with a pretty high caliber of advisor. But even that being the case, you do this long enough and you're going to come across some situations where mistakes get made. Whether they're your mistakes that inevitably will come up or if it's the custodian's mistake. I've got an advisor right now whose custodian incorrectly issued every single 1099 R for backdoor Roth contributions this year. So they're having a fun time trying to sort through that with the clients. But we had a couple of situations this year, both ones that we were adjacently involved in and there's ones that got passed along to me of advisors making mistakes on 60 day IRA rollovers of using because there's this idea that can work really effectively if you have a great process for it, of, hey, let's take a large IRA distribution right at the end of the year, withhold the whole thing for taxes so that we make sure that we cover Our safe harbor and don't have underpayment penalties. And then let's put that money back in the IRA within our 60 days so that we don't actually draw down our IRA.
- [17:33]
Ann
And so for some small underpayment penalties.
- [17:36]
Steven Jarvis
Well, so depending on the situation. Yeah. Like. Like this isn't something I try to do with every client. There's. There's a lot of work to it. But I've come across situations where, hey, that could, that could make a lot of sense. It's honestly, Thomas, it's usually because something unexpected happened during the year and now we're trying to play catch up. Or to your point before, about clients not even always being aware of what they should share. It's something went on earlier in the year and now there's now bringing it to light. But this is one of those things that, to your point, if you don't do it right, there's a lot of risk involved. And so this is one of those situations where I can see how this works for me. When an advisor comes to me and says, hey, Steven, I made a mistake. I need it. I need to understand how to navigate it, what I should do about it. Let's figure out if we really made a mistake or if we can fix this now. And that's a. That's a whole different situation than the advisors who just tell me about this when they don't have relationships with the CPAs involved and again, they're getting thrown under the bus. It's a combative relationship. It's everybody pointing their fingers and saying, no, it's your fault. No, it's your fault. Where when there's that proactive relationship, when the advisor has taken the position of, hey, I might not be the tax expert, but I am going to take responsibility for making sure my client's taken care of. Then we see these things through to the end. We learn a lot along the way and we make sure the client's taken care of. But it also creates a completely different experience for the client when those relationships are collaborative versus combative.
- [18:58]
Ann
That makes sense. I guess that gets my mind going on. Like, it seems like the issue here is not like actually advisors giving good tax planning advice or giving good tax advice. It's that they give advice and they don't really give potential downsides that then lead to issues. Right? So, like, maybe a perfect example is, hey, you know, borrow from your 401k. Right? Maybe the best alternative here of all your options was borrow from your 401k, but you didn't alert them that if they get fired, they had to pay that loan basically and sell you back or you're going to have, it's going to count as income and you're going to pay taxes in the 10% penalty. And so because they took your advice, they missed this whole like, wow, this is a huge bomb that could happen. And so you know business owners better, you're on a business, less of a risk employee, you're in tech, all this tariff stuff happens, you get fired and now you have a big tax issue because you borrowed X dollars from your 401k and the advisor just didn't give you that tax impact that you should have been made aware of.
- [19:55]
Steven Jarvis
Yeah, way more often I see disgruntled clients than I see actual like lawsuits against advisors on tax stuff. Like that's, that's the exception. More often it's the advisors are losing clients or making their clients really mad because to your point, they didn't set clear expectations and they didn't reinforce those expectations. Because we also got to remember that just like for an advisor, taxes is just one of the things you talk about for a client, not only as taxes, only one of the things they're dealing with. It's something they'd rather not think about and they're going to intentionally avoid. And so even if you have a great planning meeting with them in May for next year's taxes and they are going to forget most of what you told them. And so if your only touch points are, hey, in May you said, let's do X, Y and Z. And then in March of next year they're like, thomas, what the heck? I've got this giant tax bill and you're, yeah, and then you, you can go back and I'm sure your process works better than this anyways that you're reminding them along the way. But sure, other advisors might go back, oh, hey, Thomas, remember we did these things. This is why it was important. And maybe the client even comes back around and says, oh yeah, that's right, now I remember. But you still could have avoided that moment of panic, that moment of anger. If you have clear repeatable processes, if you're reaching out near the end of the year to remind them, hey, come tax time, here's the three things that we did together. Here's how they're going to impact your tax return. If your CPA has any questions, please have them let me know. I'll make sure you get taken care of.
- [21:13]
Ann
Yeah, and that's exactly why for us, we have that meeting. And then we have a November December meeting. Now we have more data on the business. Now we have better projections. Maybe you don't need a Q4 payment, maybe need a bigger one. Maybe you need a larger bonus. Maybe you need increase withholding. Here's you do QBID, etc. And then we meet in Q1 when we have all the finalized numbers, then you're doing after your profit share or you're doing cash balance plans or you know, maybe last P TAP payment or whatever those things are. So, like you never go more than four or five months without an update and projection. So nothing is a surprise unless you didn't give the right info. Okay, well, I question for you, Ann, because I don't think we've hit too much on, you know, maybe some issues that you've seen. You know, I guess both you and Dave have been on the in the world of over as an estate planner, but now kind of mixed in the financial advisory route. Have you guys seen any issues of, you know, where advisors can go wrong here or how advisors maybe best stay away from that?
- [22:09]
Thomas
Yeah, I would say, you know, in my private practice, you have advisors who just, you work very well with them. That's why they refer clients to you. Right. When the clients need like the big intentionally defective grant or trust formed and doing some intricate transactions with that trust. And where I see some tension, I think is where you have an advisor who has worked with other attorneys and have seen those attorneys get comfortable with certain structures, actually usually for tax reasons to. So let's say like income tax consequences of doing one of these, like intentionally defective grantor trusts. And they take certain positions that you want your new attorney, somebody you've maybe worked less often with, to take those same positions. And it turns out those attorneys have a different interpretation of the tax code or their malpractice insurance looks so different. So they need to bring in different attorneys into the process. Because law firms also have their own, you know, processes for who needs to be staffed on what kind of questions. And so in my world, there was a time where, for example, we had certain partners at Perkins Coie who were comfortable taking certain positions on the grantor trust for a joint trust, meaning the two spouses formed one giant trust together and those interest payments on a gift sale transaction being disregarded. But certain other partners said, hey, you actually need to have individual trusts because really, from an income tax perspective, it's a little unclear actually whether or not you can disregard those payments because the grantor trust needs to be owned by One person, that's how the tax code is set, up, not two people. And so even a basic structuring question like this can call into questions who makes that decision. Right. Is the financial advisor telling the client, hey, of course you can have one giant trust you and your spouse, and then all of a sudden you have a CPA and an attorney who are like, either one of us is not really ready to make that determination or be comfortable with that. And so you kind of have to know your having done some of these, this more complex planning with those attorneys, you'll find that there are still gray areas as well that they're trying to think through. And so knowing which attorneys to go to because you've seen it done before, is really important. And if you're working with a new attorney, making sure that you do run those, like, even basic structuring questions by that attorney to make sure that they're comfortable with what they're seeing.
- [24:53]
Dave
Yeah, I think I've definitely seen there is sometimes a reputational risk of financial advisors when they overstep and they present something that if you pull on the thread isn't going to hold up and it doesn't make them look very good once it gets to the attorney or to the CPA because they heard something or, you know, they presented some kind of idea that was not, you know, it's a good idea, but in their specific circumstances, not going to work for whatever reason. And so I think it's really important from that perspective that certainly you understand, you know, which professionals have the deep intel into their specific situation when you present something that might not work out. But I will say, you know, when I was practicing, I really, really wish that I involved financial advisors more into the planning process, because when I met with clients, it would be in very small increments, you know, be it'd be a consultation that would be an hour, maybe another meeting. I didn't know a whole lot about that client. So we may have come up with a great strategy from a financial standpoint, but when it comes to goals, the advisor knew a lot more about their behavioral biases, their family dynamics, their level of sophistication, all things that were really important as far as what structure you go into. Like, for example, you know, you might suggest that someone does a family limited partnership, but there's a lot of administration that's required with that. And there's a lot of things that the client needs to follow through on. A lot of reporting that if they don't have those kind of behavioral characteristics that are actually going to follow through on it, the plan will fail. And those are things that I think financial advisors can provide a ton of context to the other professionals on.
- [27:00]
Ann
And I think with sometimes too like I've had clients where they start the estate planning process and then they like meeting one and meeting two is like six months to a year apart. And then their final meeting they get their documents is like another year apart. And you know, this just happened with my clients. And I was reviewing before he signed it, I was like are you sure you want it to look like this? Right. Like you know, and I realize it two years ago was when he first met with them, he just started his business and this year he, you know, at that point he had no job for a year, started his business, income was different. This year he was going to owe $1.6 million in tax. So that tells you a lot about his income situation. Was like, okay, I don't think you really want your kids to get all this money right now and I don't think you want your now 19 year old child to be your trustee and these things. And he was like, oh great. You know that it's actually really good point. You know, I sent an email to his estate planning team like hey, here's the changes that happened in this last year. Here's some things that we're thinking about and here's some changes that would want to be made. And you know, I think that was a big value add. Otherwise the client didn't even review their docs. Right. They were just going to go and get them signed. They weren't even going to think about the people or those decisions, especially how it change in a couple of years. And that's how I think we all have to face all of it. Right. Like this could be your tax team for one. Right. Like a lot of my clients graduate beyond their tax team. Could be the estate side. Right. Like you have graduated out of the will. You need a revocable trust. Maybe you need gifting trust or for your kids. Like this is why we review things every couple years is because a lot of people's life change really quickly and the professionals, the documents, everything should be changing with it.
- [28:30]
Steven Jarvis
Yeah, it's not an accident that financial advisors are so well positioned on, on so many of these topics because just like you're describing Thomas, whether we're talking about the state planning documents or the tax return, the client doesn't have the expertise or quite frankly the interest to make sure that their final documents actually make sense for their life. And most of the time, the expert, whether the CPA or attorney, has such a narrow glimpse into that client's life just because that's all they've been provided. The client doesn't know what all information they should provide. And so financial advisors just inherently to the model have a lot. They have enough insight into the expertise to know when experts need to be tagged in. And they have way more context on the client's life, sometimes probably even more so than the client even realizes or that the client really appreciates. And so as much as I would love to pretend that I'm the smartest and best person in every room, I'm not. And financial advisors are really well positioned to help bridge that gap.
- [29:23]
Thomas
And here what I would add is sort of parting thoughts. I think folks really think about planning as separate from implementation and planning. Doing the homework on the front end, getting to run a scenario, present some idea, educate the client. That's all very important, important. But there is so much role for you to be played in the implementation of that plan. Once the documents are signed, it's not like they should, you know, just sit on a shelf, et cetera. Like, there's going to be a CPA who needs to take, you know, file returns based on that planning. There's going to be, you know, the need to like, fund the trust or whatever else is going on, look at the cash flows for the client now that you know a trust is in place or whatever it may be. And so you play such a role in that. And I think this idea of, like, you giving advice, advice is very broad, right? There's advice in the legal sense that gets you into trouble when it's legal advice or tax advice. But there's actually this whole world of just, you know, bringing some common sense to the situation, understanding the client's goals and objectives, that you are absolutely bringing value by doing that. And so, in fact, my practical pointer today for you is as you look at tax planning your clients are doing, or estate planning or whatever else it may be, get a copy of those documents after it's been put in place too, right? So it's not just on the front end to Thomas's point about seeing their last returns, but continuously asking for those documents. And as soon as, you know, like assigned to meeting has happened, or it's April, you know, give your favorite CPA a little room to breathe and maybe go on vacation, but like, you know, may first reach out and ask proactively for that information as well.
- [31:18]
Ann
Or ask your client, they got a copy of their return too. Like it's, it's pretty easy to throw it in the drive for you. But before we wrap up, Steven, there's one point I want to make sure that we hit on here. And before we recording, you mentioned a little bit about you were seeing a lot of advisors actually get in trouble for not giving the tax advice. And I would love for you to be able to share that point before we wrap up.
- [31:40]
Steven Jarvis
Yeah, so that comes directly from talking to E and O providers. So again, I like to talk about reality and not just theory. And so as I talk to, you know, providers, one of my, one of my favorite questions to ask them is, hey, what kind of claims are you actually having to make payments on? Because that's about the best indication of where the liability really is. Like where, where's the, where's the money coming into it? And the examples that they were most recently able to give all had to do with advisors who thought they were staying really far away from tax liability by just not even talking about taxes. And most of the time it really just came down to either really unclear expectations of what the tax bill of something was going to be or that the advisor back to the comments about, you know, planning versus implementation or planning versus execution. The advisor might have explained the situation correctly, but then didn't monitor that it was implemented, that it was actually executed the way it should have. So the money went to the wrong place, the form didn't get issued correctly, they didn't ask enough questions about the client's life and didn't realize what tax bracket they would actually be in. Like there's these, some of these pieces missing. And then the client says, wait a second, I got a half million dollar tax bill that I don't think was my fault, I don't think was the plan, whatever, whatever that looks like. I've even seen situations where the client ends up getting reimbursed for the tax payment or the tax payments they had to make, even though it was a tax deferred situation. So the client was eventually going to have to pay the taxes, but the advisor screwed it up and created a taxable event 10 years too early because they didn't process the paperwork correctly. So now the client gets their taxes paid for them that they would have had to pay in 10 years. All this to say that usually where I see the people get in the biggest trouble, it's kind of two opposite ends of the spectrum. The people doing borderline fraudulent things, yes, of course they're eventually going to get in Trouble, please stay away from that kind of stuff. But the opposite of the spectrum, that the people who do nothing on taxes are not just inherently safe because money, every money decision has a tax impact. So, so don't, don't let your indifference turn into negligence that it costs you.
- [33:39]
Ann
Completely agree. I think that's a really great way to wrap up. Steven. Appreciate the time. You know, before you, before we wrap up, first, let everybody know, best place to follow you. Second, you didn't plug this, but we were talking about how to stay educated. You do have a tax conference later this year and I, I don't know who else is gonna be there. I think I'm gonna be there speaking. I would assume a bunch of the wealth team is going to be there as well. And I think it'd be a great place for everybody listening because, you know, the biggest question I get asked from advisors is where do you learn about tax stuff? And I always say binge my content. I create everything I wish I got to learn. But this is a conference all built around tax planning. And I think the one way to stand out as a financial advisor is no tax. Right? Like you will be in the top 1% if you know tax. And going to conferences, listening to podcasts, reading blogs like you can get there pretty quick.
- [34:27]
Steven Jarvis
Yeah, completely agree and thanks for opportunity. Follow me on LinkedIn, the retirement tax Services podcast. Talk about tax planning non stop. And then, yeah, the summit. This is our third year doing the summit. Wealth.com has been a sponsor each of those years, which we've really appreciated. Events are great when we have great partners. So it's September 30th through October 3rd. You can go to retirementtaxservices.com to get signed up. We'll once. Geez. We won't quite double again this year, but pretty close. There'll be over 250 advisors there. The whole conference is focused on how do you take action. We intentionally include lots of breakout times and long break periods basically so that advisors can learn from each other as well. We like to bring lots of really smart people who are currently doing this stuff to share what works from stage and then we give you time to learn from everybody else that's there. So one of the most flattering things that anybody has said about the conference was this. Somebody who's been the industry for decades said this is the first conference I'd been to that felt like a room full of doers and not a room full of lifetime learners. Because at the end of the day, what I care about is what you go home and do for your clients.
- [35:30]
Ann
Love it. Love it. All right, everybody. Thank you for listening. Please remember to rate and subscribe, and we'll see you back for another great episode episode here in a couple weeks.