The Internal Revenue Code stipulates that US citizens must pay taxes on all income worldwide. Which makes it somewhat inevitable that financial advisors, who counsel clients on how to enhance their financial futures and generate wealth to achieve their financial goals, will have to help their clients deal with the tax consequences of that financial success (and the implementation of the advisor’s advice along the way). And in the end, it’s appealing to provide tax guidance to clients, as the hard-dollar tax savings can in many cases more than offset a financial advisor’s entire fee… even if we’re not ultimately the ones who prepare and file the tax return itself (which, in the end, is backward-looking anyway, while financial advice – and its potential tax consequences and tax savings – is an exercise in forward-looking planning).
Yet the irony is that even as the world of financial planning and tax planning converge – especially as technology automates more and more of the investment process, shifting the focus of the advisor value proposition to the other supporting advice areas (e.g., tax planning) around it – there remains remarkably little in the way of tax education for financial advisors. As in most states, CPA licensure requires numerous courses or outright years of experience in auditing (which isn’t practical for most advisors to get after they’re already advisors), the Enrolled Agent license is still primarily focused on tax compliance (e.g., filing returns and other tax reporting, and responding to IRS inquiries), and what little advisor education that exists is either relatively basic (the CTS designation) or a very substantial commitment (e.g., a Master’s degree in Taxation).
And so we’re excited to announce a new Kitces Course on “Reviewing The Tax Return For Planning Opportunities”, a 6-hour online educational program designed for CFP certificants who have obtained the tax knowledge but have little-to-no practical experience applying it in the real world (and would rather gain experience in a structured course that allows them to apply the knowledge and practice with hypothetical-but-real-world client scenarios, instead of just trying to figure it out on ‘live’ clients when real dollars are at stake!).
In the end, we anticipate this new Kitces Tax Course will be just the first of many to come, providing not just the knowledge but the opportunity to practice and master the skills it takes to become a better and more successful financial advisor. And while we don’t have any plans to issue a new designation – there’s enough alphabet soup in the world of advisor designations – we do hope that advisors who complete our new Kitces Courses will not only use their completion certificates to claim their 6 hours of continuing education credits… but also include it on their resume as a demonstration of their commitment to honing their skills as a financial advisor!