It has always made sense for financialadvisorstopartnerwith certified public accountants tohelp clients.
But with the COVID- 19 pandemic,the tax implications of relief packages and potential tax changes withthe new presidential administration, itmakes more sense than ever for advisors and CPAs to team up, according toexperts in both fields interviewed byInvestment Advisor.
They also provided some criticaldo’s and don’ts for advisors workingwith CPAs.
WHY CPAs AND FAs SHOULD BE
“The pandemic has led to unique planning opportunities that have both taxand financial planning applications,”according to Jeffrey Levine, chief planning officer at Buckingham WealthPartners and a CPA. One example isthe waiver of required minimum distributions in 2020 and the ability forindividuals to roll back distributionspreviously taken to satisfy that requirement, he noted.
“Everyone is overwhelmed andstressed,” Levine said. “And those twothings make it more likely for mistakesto occur. Working together, as a team,collectively for a client’s benefit, makes itless likely that such mistakes will occur.”While advisors should strive tobecome educated on tax issues, theydon’t always know as much about taxlaw as a good accountant. Conversely,“CPAs tend to be history teachers: Wetell you what already happened on a taxreturn,” Ed Slott, CEO and founder ofEd Slott and Co. and a CPA, pointed out.
“Right now, I would bring in attorneys, too,” to talk about estate planningwith advisory clients, Slott said, notingthe increased demand for estate planning due to the pandemic.
Recent legislation “added newopportunities that will only be available for a few years,” noted DavidStolz, chair of the American Instituteof CPAs’ Personal Financial SpecialistCredential Committee.
For example, it is now possible tomake a deductible charitable contribution for up to 100% of adjusted grossincome, Stolz said. “Maybe the advisor would like to suggest a large Rothconversion, and the CPA could suggesta large charitable contribution fromother funds to offset some of all of theincome from the conversion,” he noted.
“You need to communicate to takeadvantage of opportunities like this.”
OTHER GOOD REASONS TO TEAM UP“If advisors are looking to grow theirpractice and move up market andwork with higher-net-worth and morecomplex clients, in our opinion, there’sno better way to do that than with partnering with a CPA because the CPA hasaccess to those clients,” according toAndree Peterson, chief implementationofficer at the financial planning firmIntegrated Partners.
Meanwhile, “from a CPA perspective,especially with what happened last year,everybody’s looking for advice and CPAsare starting to recognize that they needto offer more advice and services withintheir practice,” she noted.
By Jeff Berman
The Do’s and Don’ts of Partnering With CPAs
Ed Slott, Jeffrey Levine and other CPAs and advisors give advice for making
this critical relationship work.