Why tax advice is more valuable than tax planning
Most financial advisors at most firms provide some level of tax planning. Afterall, it is impossible to make good financial decisions without considering taxes. However, getting real tax advice is far more valuable.
What is the difference between tax planning and tax advice?
- Tax planning is general. Tax advice is specific
- Tax planning is a suggestion. Tax advice is a responsibility
- Tax planning can be helpful. Tax advice enables great service
Typically, tax planning involves what one could do without making a concrete recommendation. For instance: “consider Roth conversions to lower future tax bills.”
Whereas tax advice states explicitly what one should do: “Transfer $45,500 from Bob’s IRA to his Roth IRA via a direct conversion rollover now.”
Tax planning suggests what one should consider. While there is value in these suggestions, but going a step further to give tax advice means more responsibility, a responsibility most firms do not want to accept. This aversion to giving advice afflicts firms of all sizes, but a quick survey of organizations you’ll see on TV starkly highlights their reluctance. The statements below can be found at the bottom of almost any tax-focused page and many other pages of the respective websites and in account paperwork.
“Fidelity does not provide legal or tax advice. …Fidelity disclaims any liability … Consult an attorney or tax professional regarding your specific situation.”
“Vanguard does not provide tax or legal advice. … We recommend you consult with a tax or legal advisor about your individual situation.”
“Schwab Wealth Advisory does not provide specific individualized legal or tax advice. Please consult a qualified legal or tax advisor where such advice is necessary or appropriate.“
“Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.”
“JPMorgan Chase and its affiliates do not provide tax, legal or accounting advice. … You should consult your own tax, legal and accounting advisors before engaging in any transaction.”
“Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.”
“Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.”
Firms that disavow tax advice spend a lot of time and money trying to make their adviser appear tax savvy without taking on the responsibility for giving tax advice. For example, many “independent” advisory firms affiliate with LPL Financial, a lesser known but large brokerage firm. LPL cautions those advisers to “Always include disclaimers in your tax planning discussions … you might state, “While I can provide general tax planning guidance, specific tax advice should be sought from a qualified tax professional.”
You won’t see such language on our site or in our forms. Instead, our limitation is simply “Tax advice is given only to clients and only when agreed to by MFT.”
What happens when the IRS questions your tax return?
If you’ve only received tax planning, you will likely be told to hire a tax advisor, or you’ll need to try to work with the IRS yourself. Good luck!
By contrast, if you get real tax advice, the person giving the advice can represent you in front of the IRS and defend your position.
By contrast, if you get real tax advice, the person giving the advice can represent you in front of the IRS and defend your position.
Unfortunately, it looks like the odds of having a tax return questioned are going up. In the last few years, the IRS has sent a large number of erroneous deficiency letters. It appears to be automation run amok. Anyone can get these. In fact, a few members of our staff have received them for their personal returns.
While we cannot stop the IRS from sending such letters, our team of Certified Public Accountants (CPA) and Enrolled Agents (EA) are empowered to deliver great service to clients that opt to get our tax advice. While we are not an accounting firm (we don’t prepare financial statements for businesses or audit their books, for instance) we do prepare tax returns for wealth management clients that want us to do so. Thus far, our clients who have had our tax professionals prepare their returns have not had to sit on hold for hours, gather documents, formulate a reply, follow up, or find and pay a tax advisor to sort things out. Our team has handled these matters for them.
Why is tax advice offered at Moisand Fitzgerald Tamayo but not at other firms?
One of the advantages of being a truly independent, 100% employee-owned firm is we can pursue services that are most valuable to clients without having to work through a corporate bureaucracy. We are free to hire properly licensed tax advisors that can be engaged for tax advice. At present, we have three CPAs and seven EAs authorized to represent taxpayers before the IRS. Instead of fearing responsibility for tax advice, we start with tax planning and then take the important step of providing tax advice to our clients that want it.
Bottom line: Tax planning can be helpful, but tax advice can be much more valuable, and we are happy to be able to provide that value for our clients.
Making News…
We continue to help various media outlets provide sound information to their audiences. (Some links may require a subscription to view.) Dan Moisand,CFP® continues to write for Florida Today and MarketWatch, which are sometimes syndicated to other sites such as YahooFinance.
Do Roth IRA conversions still make sense with the passage of the GOP tax law? – MarketWatch
Don’t flunk retirement: pitfalls to avoid – Florida Today
Are ETFs better than mutual funds? – MarketWatch
Taking stock of my financial matters: Is it time to sell? Or not sell? – Florida Today
I rolled over my 401(k) and was taxed and charged a penalty. What happened? – MarketWatch
Give it to me straight: What’s the worst-case scenario for stocks right now? – Florida Today
DJ Hunt, CFP® penned his quarterly column for Rethinking65, a publication for “advisors managing wealth for life’s second half.” In it he describes how tariffs could affect small business owners.
In the News…
Once again Moisand Fitzgerald Tamayo, LLC was named to Financial Advisor magazine’s list of the top Registered Investment Advisory firms in the U.S. The list is based on assets under management. Other than the year we somehow missed the deadline to be considered, we have appeared on this list every year since 2006.
Dan Moisand,CFP® was recently recognized by publication Advisor Hub for its “2025 Advisors to Watch.” The list highlights advisors from across the country who are growing their businesses and delivering exceptional service to clients. The publication considered many factors including assets under management, the ratio of team members to client households, business growth, and professionalism, which evaluates an advisor’s regulatory record, certifications, years of service, and community involvement.
If you are a member of an organization in need of a personal finance speaker, we are happy to talk with your group’s organizers about helping out at no cost.
Tommy Lucas, CFP®, EA provided financial tips for assisted CNBC reporters on the following topics, a couple of which were syndicated to NBC affiliates:
Trump’s ‘big beautiful bill’ includes these key tax changes for 2025 — what they mean for you- CNBC
Mutual funds can trigger hefty yearly capital gains taxes. Some lawmakers want to change that – CNBC
Tommy also shared his expertise with Forbes on the changes coming to health insurance in the article “ACA Premiums Are Set To Spike For Some In 2026—How To Lock In Savings Now” Tommy explained, “This is going to potentially be thousands of dollars in cost, so always talk to a professional who knows the ins and outs of this… Open enrollment is coming up pretty soon in November, so start planning now.”
DJ Hunt, CFP® served as a source for an article for Rethinking65 about two states that seem to have a good environment for starting small businesses. “Businesses are formed when entrepreneurs are optimistic, and there’s a lot of optimism in Florida,” Hunt says. “It’s a solid place to raise a family. It’s a solid place to put down roots and build businesses. And there just seems to be a never-ending flow of new customers coming in here. So, the wisdom of the crowd around here would indicate that Florida’s got a bright future.”
Notable
Upcoming Client Portal Changes : The software provider that powers your client portal is making upgrades to its systems. As a result, come January, your portal will have a different look and feel. We will have further details later in the fall.
73% of workers say there’s at least one adult for whom they may need to provide long-term care in the future (Employee Benefit Research Institute)
63% of working Americans report that financial stress has negatively affected their productivity at work (NAPFA)