Steven Jarvis, CPA, is the co-founder, CEO, and head CPA at Retirement Tax Services. He also hosts their podcast, where he aims to bridge the gap between tax professionals and financial planners to better serve mutual clients. He sat down with Matt Fizzell, CFP®, to talk about how collaboration can provide enhanced value to both professions. They also discuss why collaboration has been a struggle in the past and how you can build a mutually beneficial partnership with your client’s tax planner.

CPA and financial planner partnerships

When Steven starts talking about collaboration between advisors and tax pros, he usually needs to reset some faulty assumptions. The first one being that the main value the professions have for one another is simply as a source of referrals.

He says, “What usually ends up happening is that a new advisor goes to their local Chamber of Commerce meeting, looks for the CPAs in the room, and says, ‘Hey, our clients are similar, you should send me all your clients.” But rather than referrals, what the advisor gathers is a bit of resentment.

And that’s unfortunate, because tax planners and advisors have so much more to offer each other. The trick is to combine forces for the good of the clients.

While Steven is a huge advocate of CPAs, he also knows their work tends to be focused on tax compliance and not forward-looking tax planning. This creates a huge opportunity for advisors who are willing to take the time to learn ways to deliver value to their clients from a tax standpoint. After all, the best resource for advisors to level-up their tax education is by collaborating with an experienced CPA.

While advisors can learn from CPAs about the tax implications of their recommendations, they can also teach CPAs how to consider long-term strategy. From Steven’s perspective, tax planners should also look forward for their clients, because that's how all financial service professionals can make sure clients don't overpay the IRS. As Steven put it, “Everyone should pay as much tax as they legally owe. But you don't need to leave a tip.”

By looking five, ten, or twenty years down the road from both perspectives, advisors and CPAs can help clients make better plans for growth and do the best job possible of minimizing their tax liabilities.

Bridging the gap between CPAs and financial planners

Steven says, if we want to create a beneficial partnership between CPAs and financial planners, the focus on referrals has got to stop. If you are going into a meeting with a CPA, and all you're thinking about is referrals, nobody wins.

Instead, he recommends that we consider tax professionals as subject matter experts on a topic that’s intrinsic to your clients’ success.

Think of it like this: If you meet with a CPA, even if you never get a referral from them, you’re still going to benefit from this relationship. Look for new information about how your financial plans play out at tax time, and search for tax planners you might refer clients to who cover unique tax situations.

“One approach I've seen work over and over again,” Steven says, “is literally offering to pay for an hour of the CPAs time.” Showing that you value their time and respect their professional expertise is an excellent way to start a collaborative relationship.

Another roadblock you might run into is a bit of confusion about what you actually do as an advisor. Steven says that CPAs wonder about an advisor or planner’s areas of expertise, and also what happens when a client reaches out to you. Are you going to try to sell them some stock so you can get a commission or plug a bunch of annuities to them? Or do you take a holistic approach and look at all these different things in their lives to give them a comprehensive financial plan?

Because of this misconception and general ambiguity, Steven recommends that part of your strategy in connecting with tax professionals should always be educating them on exactly what you do for your clients. When they know exactly what you’ll take care of, they can feel confident sending clients your way.

Conflict with CPAs

There is one time where CPAs and financial planners may clash: at tax time. That’s because our strategies for growth can appear to be at odds with their mandate to minimize taxes.

Advisors generally work with their clients on accelerating income, creating a bigger tax liability in the current year, like with capital gains harvesting. In the long term, there are going to be a number of benefits to the client. However, in the current year, it may create a slightly higher tax bill than they would otherwise have to pay.

While our clients can get excited about the long-term benefits, they also can easily forget those benefits when their tax bill comes due. Since a CPA has to be the bearer of bad news, they can sometimes feel a bit defensive. Coupled with not understanding your long-term strategy, your client’s CPA might be a bit critical of your advice.

Although this situation can be challenging, it can also be an opportunity to build understanding and bridge the gap between the professions. It’s important to clear the air as quickly as possible.

Steven says, “If there are differences of opinion, try to get everyone on the phone or get your clients permission to have a direct conversation with the tax preparer.” A private conversation can be particularly effective, because the two of you can avoid becoming defensive in front of the client. Ask them to explain how this all fits together and focus on finding the right solution for the client — rather than worrying about who’s smarter.

Learn more about tax planning

If you’re a new planner and you want to learn more about tax planning, start with an open mind. Steven says, “Approach this from a place of acceptance that you have a lot to learn.”

When he works with advisors at Retirement Tax Services, Steven tries to point them in the right direction to find resources that will be relevant to their practice. Just pick somewhere to start, and then consistently build on that. Start with the things that are most relevant to the clients you serve, and make sure that you're consistently learning more. 

Steven’s final recommendation is to make sure that you're reviewing tax returns for all of your clients on an annual basis. This will help you learn a lot about the clients themselves and it will show you the consistent themes you're going to see with the types of clients you work with. That, in turn, helps to be able to put tax ideas into context of how they actually get implemented.

As long as you’re focused on delivering value to your clients, your connections with tax professionals will get a whole lot more satisfying.

What You’ll Learn:

  • Why CPAs and CFP® professionals are an ideal match 
  • Why it’s been so hard for the professions to connect up to now
  • What to do when there’s a conflict over a client’s plan
  • Where to level-up your tax-planning expertise

In this episode of YAFPNW, Steven Jarvis, CPA, MBA, and Matt Fizell, CFP®, talk about:

Interested in following Steven? Follow him on LinkedIn!