While the financial services industry evaluates the Department of Labor’s Fiduciary Rule and its eventual implementation, the fiduciary standard itself has long been the norm for Registered Investment Advisors such as Pinnacle Advisory Group. Like CPAs, and in keeping with standards set by the CFP Board, we are charged with providing personalized financial advice that is solely in the best interest of our clients.
Shared adherence to that standard might be considered the lynchpin of a productive relationship between advisors and CPAs, and our mutual clients can derive great benefit from this foundation. On a practical level, this means recognizing our respective roles and engaging in timely communication aimed at cost effective solutions.
To this end, some of the steps we take are relatively simple practices aimed at making tax season go as smoothly as possible for clients and their preparers. For example, by providing CPAs a simple list of our client’s accounts and whether or not each will have a Form 1099 for that year, we can save time spent chasing down missing forms during tax season. Similarly, we can assist by assembling, in advance, cost basis information on older investments where needed. In this way we can facilitate prompt completion of the tax return itself and help our mutual clients save on taxes due.
Even more beneficial is the communication we provide throughout the course of the tax year. By keeping CPAs in the loop as to their client’s financial lives, we can facilitate the adjustment of payments and withholdings to avoid penalties, and can prevent the need to ‘surprise’ the client with negative tax results when their return is being filed. Does the client have a significant increase in capital gains incurred this year? Are they planning to increase their charitable giving? Did they sell their home, or engage in Roth conversions? These are just some of the many decisions or life events that can have significant tax consequences, and they create opportunities for both planning and communication. It is beneficial if tax preparers are informed as these things unfold.
The term fiduciary can also be defined as “an individual or entity in whom another has placed the utmost trust or confidence to manage and protect property and money.” Where advisors and CPAs form a team that operates on that same plane, clients will benefit from both a smoother experience and optimal financial results, enhancing the value proposition offered to them by their CPA.
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