3 Best Practices to Build Stronger Relationships with Tax Advisors

Posted by Rose Watson, JD, MSEL

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January 20, 2015 at 10:00 AM

build stronger relationships with tax advisorsHigh-net-worth clients often have a team of professionals they consult with to further their financial goals, among them attorneys and tax advisors. As we head into tax season, you may find yourself looking to build stronger relationships with tax advisors so you can provide your client base with a more comprehensive financial planning experience.

As the financial advisor, you likely have a better awareness of your clients' overall financial picture and personal circumstances, both of which have a direct effect on their tax picture. With this awareness comes the opportunity to help clients work with their tax advisors to maximize their current year's tax return and recognize future opportunities to minimize taxes.

Because the potential payoff is high—for you, your clients, and the associated professionals—it's a good idea to focus on trying to build stronger relationships with tax advisors. Here are three best practices—and numerous tips—to help you find the right partnership opportunities and work effectively with your clients.

1) Find the Right Professional

Collaborating with a smart, capable tax advisor enables you to more effectively pursue your clients' goals. But finding the right person is not an easy task. You need a professional who provides the same high level of service as you do (and that your clients have come to expect). Ideally, this person will be open to establishing a strategic alliance and fee sharing, not simply acting as a referral source, but that's certainly not the only relationship arrangement you can set up.

Here are a few tips to help you find the right tax advisor:

  • Pay close attention to his or her demeanor. Is he or she approachable, both for you and your clients? Do you think that you could collaborate effectively to promote your client's interests?
  • Consider his or her compensation model. How is compensation calculated? Is the structure likely to be agreeable to your client's expectations?
  • Examine his or her education and work experience. Does he or she have any licenses or designations, and how long has he or she been in the business? How often does he or she engage in continuing education?
  • Learn his or her approach to business. How does he or she work with clients? What are the expectations for routine client interactions? Does he or she return calls in a timely manner, and what is timely? Does he or she perform the work personally or outsource it? Does his or her business specialize in a particular niche? If so, which one, and what types of clients would benefit most? How does he or she treat employees?

2) Strengthen the Relationship

Not matter if you just established ties with a tax professional, or if you've known each other for years, be sure to continually facilitate and strengthen this relationship. After all, a strategic alliance between financial and tax advisors can be a powerful connection. Here are a few tips for growing your alliance:

  • Articulate the relationship's structure. Be sure that you are both on the same page when it comes to your relationship. You may choose an informal partnership where you refer each other whenever possible; a formal, fee-sharing alliance; or another arrangement.
  • Work toward a long term-relationship. Time builds familiarity and trust, as well as improves the ability to fine-tune your processes. It's always a good idea to touch base consistently, so consider scheduling meetings throughout the year.
  • Ask for feedback. Constructive feedback should be welcomed on both sides. Be sure to encourage your strategic relationships to provide you with theirs (even when they may be reluctant to do so).
  • Consistently exceed your strategic partners' and clients' expectations.

(If you're interested in learning more about building relationships with tax advisors that will power your practice, be sure to download our white paper, "Cracking the Code of Strategic Alliances.")

3) Help Your Clients Stay Organized

You and your alliance aren't the only ones in the relationship. Your clients obviously play an integral role in its success as well. Therefore, take steps to educate your clients on the importance of providing organized information to the tax advisor. By doing so, you'll gain a better understanding of their tax picture and help clients build a smarter tax strategy for their overall financial goals. This will also help ensure that their tax filings are complete and accurate, which will further help to solidify your position as an invaluable resource for the tax advisor.

Here are a few tips to help you promote organization:

  • Encourage clients to take responsibility for their tax planning. Your clients ultimately need to be proactive and have awareness of their unique tax picture, even if they've hired a tax advisor. In your annual financial reviews, take time to review tax returns for planning opportunities. You may wish to team up with the tax advisor to look for tax-saving opportunities.
  • Help keep information up to date. If your client's tax advisor provides an organizer, help keep it current and accurate. If not, consider preparing a summary checklist. A checklist of new changes will help keep these events from being overlooked.
  • Encourage clients to organize tax documents. For example, compile W-2, 1099 income, and 1098 mortgage statements into similar groups.
  • Keep careful records of charitable contributions. If your clients made charitable contributions during the year, be sure to remind them to include any receipts provided by the charity. To claim a deduction for contributions of cash or property equaling $250 or more, he or she must have a bank record, payroll deduction records, or a written acknowledgment from the qualified organization showing the amount of the cash or a description of any property contributed, along with proof of whether the organization provided any goods or services in exchange for the gift.
  • Keep track of all potential deductions. Work with your clients to ensure that they account for all potential deductions. Medical and dental payments, real estate taxes, home mortgage interest expenses, investment management fees, and tax preparation fees are among the most common.
  • Offer to store copies of records for clients. Keep duplicates of current records for your clients to provide to their tax advisors. For example, security transactions reported on Form 1099 will require reporting information, such as the date of acquisition and basis information.

Trust and loyalty go hand in hand. By implementing these best practices and tips, you can build stronger relationships with tax advisors and other professionals. This, in turn, will give your clients and strategic partners more motivation to refer qualified prospects to you.

Developing relationships with other professionals allows you to position yourself as the lead of your clients' wealth management team. As you pursue this or a similar business model, keep the following motto in mind: "Success drives success."

Do you work with a tax advisor? What are some of your tips for success? Share by commenting below.

A Guide to Valuing Your Financial Advisory Practice

Topics: Financial Planning

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