Is Preparing Tax Returns Worth It?
Monday, April 14, 2014 00:57

Tags: Advisor businesses | business strategy | CPAs | marketing | referrals | Taxes

I'm a financial advisor. Ninety percent of my revenue comes from investment management. The other ten percent is split between financial planning fees and tax return preparation. For the last six weeks, I've been working day and night. Is it really worth it to prepare tax returns?

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Tax returns are merely records of the past. There's very little that can be done to save clients money at that point. So, tax return preparation is essentially a commodity from the clients' point of view.  It doesn't matter to a client whether it takes one hour or five hours to complete a return. It also doesn't matter if you are charging hourly or project billing, tax preparation is never going to be a big money maker. 
So, why do it? Why spend so much time and energy on endless tax returns? It's not a profit center, especially when you consider the cost of a CPA salary, an intern, secretarial time and tax software. At this time of year, I question my decision. For the rest of the year, I know why I do it: It's what the clients want. 
By offering tax preparation services along with investment management and financial planning, clients enjoy the benefits of:
  • Coordinated tax planning
  • Direct investment tax data for tax preparation
  • A "one-stop" shop
  • Continuity
Many advisors believe preparing tax returns would decrease referrals from CPAs. That has not been my experience. For those clients with a trusted CPA, I gladly cooperate. I also assure their CPAs that my goal is not to prepare more tax returns.  This actually works, as evidenced by the many clients who come my way via their CPAs.
This time next month, I'll be fully convinced that my decision to prepare tax returns is the way to go. Today, I still question my resolve. 
Beware The CPA!
Tuesday, March 11, 2014 01:21

Tags: client education | CPAs | referrals | tax efficient investing | Tax-efficient investing

 Doing your best for clients can get you into trouble. As a responsible investment advisor, you try to pay attention to all of the details:

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  • You construct a portfolio model to match your clients' risk tolerances.
  • You choose investments wisely.
  • You rebalance when appropriate. 
  • You choose high cost lots when selling from taxable accounts. 
  • You harvest tax losses when possible. 
  • You place income producing investments in IRAs. 
  • You place appreciating investments in taxable accounts. 
In other words, you are a top-notch investment advisor because you seek to maximize your clients' returns (considering their risk tolerances) while minimizing their tax costs. So, how can this get you into trouble?
Allow me to share a recent experience. A client of a little over a year scheduled an appointment, bringing her CPA in tow. Thinking that this was my client's way of introducing me to a referral source, I happily welcomed them into my office. Imagine my surprise when I found myself confronted by rage!
The CPA had just completed my client's tax return. She angrily asked how my client lost money when the market had performed so well. At first, I was confused. Then, I realized that she had only seen the taxable transactions - capital losses and limited dividend income! 
I painstakingly explained how the client's account was managed tax efficiently. Then, I brought out the performance report. By the end of the meeting, the CPA was not only impressed with the portfolio's performance, she was amazed by all that was done to decrease her client's tax burden. I was able to turn her into a fan - and the referral source I had originally hoped for. 
Thus, the warning: Be sure that your clients - and their CPAs - understand the value you add with tax efficient management. 
How Often Should Advisors Blog, Post Status Updates, And Send Email Newsletters? Why The Frequency And Tone Of Client Communications Are As Important As Your Message
Sunday, January 05, 2014 21:54

Tags: client communications | content marketing | marketing

Financial advisors are not selling deals on electronics. They’re not Internet marketing hustlers. They’re not magazine publishers. On social media, financial advisors want to come off as professionals sharing specialized knowledge. The tone, style, and frequency of financial advisor email newsletters, blog posts, and social updates are as important as the message.


You don’t want to come off like an Internet retailer. You don’t want to be slick. And you don’t want to be trying too hard by sharing information that is a waste of my time.


Some advisors seem to think that the quantity of their communication on social media is most important, when actually the quality of the information matters much more.


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Maybe one half of 1% of the financial advisors I'm connected with socially tweet, blog, or email prospects three or four times daily. Producing multiple posts daily is time-consuming and quality inevitably suffers because you are not an Internet publisher or gifted communicator. 


An advisor I am connected with on LinkedIn regularly tweets famous quotations from Ghandi, Winston Churchill, Warren Buffet and other great leaders. He's producing too much content.


If people connected with you want a stream of quotes from great leaders, they can subscribe to a feed. Financial advisors are not helping people by posting updates about topics outside of your realm of expertise, and that content seems unlikely to boost your search engine rankings. If you don't have something intelligent to say, don't say anything. 


Try to provide content with specialized knowledge targeted to your local market. Intelligent financial tips builds credibility and opens the way for someone to get to know you. Tweeting once a day about investing, financial planning, and living well allows someone who does not know you to get to know you. Social media and email newsletters allow people to stay in touch without engagng you. That opens new opportunities.


What’s tricky is the content that advisors typically provide in email newsletters, status updates and blogs must also be aligned with their way of practicing and—most importantly—aligned with the interests of their target markets. For example, if your target clients live on golf courses, write about the local golf courses' financial condition, what they charge, whether homes sold in the past year rose in price.


If private wealth advisor annually publishes a study comparing the cost of the three most popular golf communities in the county, it could go viral of among golf community residents, who happen to be your target clients.


For a wealth manager or financial planning firm to annually rate country clubs and golf communities makes sense. It's also a good search engine optimization strategy because your firm will write posts of local interest about financial planning and investing--a combination of ideas that happens to cover your key phrases and search terms. Oh, and the local paper might want to publish your study annually and your firm could get wide exposure. 


How often should financial advisors post status udates?

Tweeting a wealth management idea once or twice a day is enough.


How often should financial advisors send email newsletters?

Sending an email newsletter once a month is enough. Twice a month would be better but is not worth the effort. Your email newsletter might contain snippets from your best originally-written posts over the previous four weeks, along with content you have not written but that is aligned with your way of practicing.


How often should financial advisors post to their blogs?

As often as possible. If you can blog daily, you may be the next Michael Kitces. However, not many financial advisors can produce that much content.


If you can post an original twist on current events once a week using key phrases and ideas likely to boost your natural search engine ranking with your ideal clients, you’re going to be successful over the long run.


Posting once every other week might be enough, depending on your keywords. But a daily post is best.


Keep in mind, it need not be lengthy. A few sentences may be enough if your words are well chosen.


To engage socially with the affluent, your blog post will need to be smart and entertaining. That's not easy.


Of course, you don’t need to write your posts. A post could be a slide or two about the economy or taxation that you narrate or a video of you talking. Keep productions to a minute or two to keep it simple enough so you won't need to edit your narration or video.


Download A Free Digital Asset Inventory Questionnaire For To Help Clients With Estate Planning For Digital Assets
Monday, December 16, 2013 11:04

Tags: client communications | estate planning | fiduciaries | privacy; security

The disposition of digital assets is a new frontier for fiduciaries and an emerging area of law that prudent investment advisors will want to track closely.


Financial advisors who want to start to provide their clients with guidance on this emerging estate planning issue may want to offer clients a Digital Assets Inventory Questionnaire provided to A4A by Gideon Rothschild, a partner at the New York law firm, Moses & Singer.


To download the Digital Asset Inventory Questionnaire:

1. Log into A4A

2. Click on the "View Public Profile" (above right)

3. Click on the tab for "Rewards"

4. Click the Premium Content link to see the list of A4A Premium Content, including the questionnaire 

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Rothschild, who also serves as chair-elect of the American Bar Association Real Property Trust And Estate Planning Section, spoke at a webinar about estate planning for digital assets that A4A members can also access for free.


The Uniform Law Commission, which drafts model laws for states to adopt, is drafting legislation for states to consider that will clarify important rules concerning who is entitled to access and inherit digital assets after the owner dies. Eight states already have statutes and several more are considering adopting laws. The laws aim to clarify who is legally entitled to access your social networks, contact list, photos, music, memoirs and other digital assets after death.


Advisors who want more help communicating with clients about the proper disposition of digital assets and other sophisticated areas of estate planning can also contact Toni Russo at Advisor Products at 516-333-0066 x224. 



The Web Has Made It Much More Difficult To Discern Copycat Content From The Real Thing
Wednesday, December 04, 2013 11:59

Tags: client communication | content marketing | marketing | SEO

Do a search on Google on any given day for “financial advisors” and read the “news” results that are returned.  It’s a simple way of seeing content being produced by and about financial advisors. Do that search today and you’ll notice an unfortunate trend in content marketing for advisors.

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Two posts near the top of the result  are uncannily similar to each other but feature information about two different advisors.


A post by financial advisor Charles P. Boinske, CFA, is more in-depth and was published December 2 on, while a very similar article posted on FOX News on December 3 under the byline of a reporter is published on Fox Business News.


The post is about five questions a consumer should ask an advisor before hiring him. The posts mention the same tips for consumers. 


The Fox News story does not mention Boinske. In fact, it quotes an entirely different advisor.


Maybe it is a coincidence. Maybe the Fox News reporter just happened to come up with the same five questions to ask advisors and tips for consumers. I guess it’s possible. What do you think?


Rewriting an article written by someone else has been a practice in journalism for many decades and it’s okay to do as long as you give credit to the original author or add significant new information that the original article missed and that changes the article materially. It’s unethical to rip off someone else’s ideas without giving him credit. I say this because it also pertains to advisors, who are increasingly creating their own content.


Advisors who rip off other people’s content could open themselves up to professional sanctions as well as a legal judgment. You just cannot claim to have written something you did not write. You need to disclose if you are not responsible for the ideas in an article on your blog or you need to have supervised the writer who did actually write it.Putting your name on someone else's work is not a good idea for an IA rep who is required to fully disclose such matters.


A couple of weeks ago, I posted an open letter to the SEC Chair saying the RIA testimonial rule should be revised because it has become antiquated by the growing use of LinkedIn recommendations and Facebook "likes," and it is actually hurting consumers' ability to find the best advisors. A day later, a blogger at a financial advisor trade magazine said essentially the same thing I did without referencing my earlier article. It happens all the time, this kind of thing. 


For advisors, the trend toward copycat content presents a moral  challenge. With the explosion of content online, ripping off someone else’s good ideas is obviously much easier than writing about your own original ideas, and no one knows when a copycat ripped off your good ideas and is taking credit for them  So if you blog about how anesthesiologists can write off equipment against in a clever and unusual way, for example, someone  can rip off your idea and no one who reads a copycat's post will know.


For ethical advisors, it is a difficult situation. However, if you are truly focused on a niche market and continue to pound away at it with your own original ideas about how to help those target clients, I believe you will ultimately win. Ultimately, providing valuable information will differentiate you. A4A's booming membership and my history of producing content here in my home alone fopr people to discover using search and social tools has taught me that  eventually good work gets recognized. But it is frustrating to see copycats borrow research and original idas in the meantime.   


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