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Dec 20, 2009 1:02 pm

I’d like to know everyone’s situation regarding tax preparation. Do you (or an in-house colleague) prepare taxes for your clients? If so, are you an EA, CPA or simply licensed preparer? Also please state if your BD has given you any restrictions on your activity.

For those who do provide tax prep, do you charge a separate fee or include it at as a service for those with certain assets under management or planning fees in general?

I’ve asked a few colleagues their opinion on offering prep services and the arguments seem to be access to information and potentially additional fees on the pro side vs potential extreme waste of time on the con side. 

Please state when you added tax prep, or alternately when you added investments in the general course of your career if you began on the tax side. (Do your clients think of you primarily as the tax guy who happens to do investments or the investment guy who happens to do taxes?) Thanks in advance for any comments.

Dec 20, 2009 5:58 pm

This year, we are partnering with a CPA who is just starting out. Those who don’t already have a CPA or accountant, will be able to come in to the office and get tax help from him. Also, clients who come to see him who aren’t clients will get a nice sit down with an advisor.

Dec 20, 2009 6:32 pm

I think it is a great area of opportunity. Making plans to move into a bigger space in 2010 and was planning on either bringing in a CPA, or.... maybe getting a tax franchise? dont know.

got the idea after driving by a plaza on way to client meeting, and saw an ria there, that also does tax prep. located in a nice mini strip mall.

Jan 2, 2010 5:29 am

Partnering with a CPA is a fine idea, but as far as doing it yourself, IMO, it’s a waste of your time.  I’m pretty much out of the business this year after being in the tax prep business for 20 years.  I just found that it took too much time away from investment management and it’s no fun at all when a client goes through an audit (I had three in 2009).  I don’t have a CPA in house, but my main referral guy is two buildings west of mine.

Jan 6, 2010 12:49 am

Indyone, is this something that you’d say you were glad you did but simply wish to cut out at this point in your career, or would you say it was something you wouldn’t do again at all if starting over from day 1 as an FA? Looking back was it a net positive in client acquisition? 

Jan 6, 2010 10:13 pm

I started a sideline business of divorce financial analysis on a sort of whim.  I interviewed with the largest divorce attorney in the area (does 60 divorces per year and each is over $1 million in assets) for my services and he said he would use me on every case if I was an Enrolled Agent.  Didn’t have a clue what one of those was but I researched, studied and took the exam, passing on the first time.  (extremely lucky I might add)

I find tax prep to be one of my favorite parts of my business and am absolutely thrilled to have included it.  People thought I was nuts but it’s worked out perfectly.  Why? 

1. I not only do their personal taxes, I often do their corporate taxes, their corporate 401-k and am the adviser for all their employees. 

2. once I’m involved, it’s virtually impossible to leave me.  In 6 years of doing taxes, I haven’t lost a single client where I handle the taxes and investments.  The reality is that you may THINK you control all the assets but you’ll never be sure unless you handle the taxes year after year.

3. I was a CFP and people didn’t link it very well with being an expert.  What exactly are you an expert in other than the planning stage?   Are you an expert at the execution of that plan?  When tax planning and preparation is included, obviously you are about the execution of the plan. 

Whether tax prep is for you is a completely different story.  Do you enjoy that type of activity?  Does it fit your business model?  (traders really don’t fit well in my opinion)  Does it fit your selling style?  You need to consider it all because it isn’t for most brokers.