Working More Collaboratively With Clients’ CPAs For Better Tax Planning (And Cross-Referral) Outcomes: #FASuccess Ep 459 With Steven Jarvis

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Resources Featured In This Episode:

• Steven Jarvis: Website | LinkedIn
• 37 Questions Checklist To Ask On Every 1040 (2025 OBBBA Update) – Download (PDF)
• 2025 April RTS Home Sale Worksheet – Download (PDF)
• The Current State of Roth Conversions – Download (PDF)
• The Summit 2026
• FP Alpha
• Holistiplan
• Kitces Report: How Financial Planners Actually Do Financial Planning
• Jump App

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Full Transcript:

Michael: Welcome, Steven Jarvis, to the "Financial Advisor Success" Podcast.

Steven: Michael, I'm so excited to be here. Thanks for having me on.

Michael: I really appreciate you joining us today, and looking forward to just talking in some, dare I say, nerdy detail about how we as advisors can work more productively with our clients' CPAs. Because the reality is, most of our clients do have some kind of CPA or of other tax professional preparing tax returns. Yes, some clients self-prepare, but the reality is, we as advisors disproportionately work with delegators to the extent they tend to delegate us the financial planning and investment management, they tend to delegate the tax preparation as well. And I think just at a more basic level, most of us have a strong self-interest to work well with clients' CPAs, both, first and foremost, just ensuring clients are served well, and because in practice, often CPAs become good working partners with us, can become referral sources for us.

Kitces research finds referrals from centers of influence, like attorneys and accountants are still the number two most common source for advisors getting new clients outside of client referrals. But most of us don't come from a tax or accounting background, haven't lived the life of a CPA, have not actually prepared returns in house, which means even if we're trying to be helpful and work constructively with client CPAs, I am sure a lot of us unwittingly do things that are not actually helpful or maybe even are a little problematic. And I know just you come to us for this conversation today as a CPA with a long history in accounting firms, and now literally running a business doing tax returns for clients of advisors, where you have to work closely with each advisory firm. So, I'm excited today to talk about, what can we as advisors be doing to really have more effective joint working relationships with clients' CPAs, I guess, and/or what are we doing that's really aggravating that we need to stop doing?

Steven: Well, Michael, I'm excited for the conversation as well. I'll nerd out on taxes with anyone. But I'm especially excited to have this conversation with you with your extensive background and knowledge of the advisor side of this. A real quick origin story for me. I've been in the CPA world for about 15 years now, and the last almost five years has been focused on working alongside financial advisors. And the oversimplification of how that transition happened was, some advisors basically came to me and said, "Hey, we can't find CPAs who will play nice with us." And so, we started Retirement Tax Services, really, with this idea of, "Hey, we're going to be that resource of a CPA team that's going to play nice with advisors." And there certainly is a very intentional effort on our side of, "How do we be a good partner for advisors?" But what I found as I started going down this journey is, it's not like all the CPAs got together and said, "Hey, we should just not play nice with advisors." It's that, to your point, there's a lot of things that just naturally happen on the advisor side that if you're not being intentional, you aren't automatically a good collaborator or partner for the CPA. You have to intentionally create a value proposition where the CPA wants to work with you. That doesn't happen by default.

Sharing The Tax Impact Of Planning Strategies With Clients And Their CPAs [06:21]

Michael: So, I want to delve further right into this. I think first and foremost, as you framed it, finding partners who "play nice," and which I find comes from both directions. There are CPAs who think it's really aggravating to work with advisors, and there are advisors who think it's really aggravating to work with CPAs. So, what's happening that we're not playing so nice right now?

Steven: I don't think it's anything malicious. I think as humans, we all have a natural tendency to hyper-focus on the thing that we're good at or the thing that we're asked to do. And so, for CPAs at large, and we'll throw enrolled agents in there as well, tax professionals, at large, we're being asked by our clients to help them file last year's tax return and to get them a giant refund right now because nobody likes paying taxes. And so, that's where that side of the industry is coming from, of what they're being asked to do and what they're experts at, of, a tax return should be accurate. A lot of people who get into tax prep, they like that puzzle that ends with a conclusive answer. And so, if your skillset is, "Hey, here's what happened, and I'm going to keep digging until I've got every dollar in the exact right place." That gives you this hyper attention to detail and a real frustration when there is context missing or when it's hard to find the right answer.

We can use a lot of examples for this, but let's just take a simple example like a 1099-R that gets generated for so many things that financial advisors do, particularly with their retired clients or their clients transitioning into retirement. That 1099-R form is very, very basic in what it communicates and leaves out a lot of really important details. And so, what might seem like great tax planning from the advisor of, "Here's this Roth conversion, we can do a backdoor Roth contribution, a QCD [Qualified Charitable Distribution]," whatever it might be, and the advisor by default is going to assume, "Oh, the custodian's going to issue a tax report that's going to go to the tax preparer, that's going to go on their tax return, and then we're going to be done. It's not a big deal." And that's not how it actually happens in practice. And so, for a good tax professional, they're going to see that form, they're going to know there's other context, but they're going to be immediately frustrated that the client isn't able to communicate that because they only mostly understood the strategy, and they haven't heard from the original person who recommended all of this, the advisor, who didn't take responsibility for making sure it got reported to the IRS correctly.

Michael: Let's stay right there in that context. So, what kind of information should we be communicating? I don't know if there's particular scenarios, Roth conversion or others. What things should we be communicating that don't show up on the documents that should be helpful?

Steven: Yeah, it's a great question, Michael. One of the things I'm constantly hammering for advisors is that pictures or it didn't happen. You need to actually understand what the tax documents involved are. So, that means if you are going to recommend a financial planning strategy that has a tax impact, which by the way, is all of them, you need to understand how that flows through the tax return because until it gets reported to the IRS correctly, it doesn't count. So, if we stick with some of those examples I gave, let's take Roth conversions and qualified charitable distributions, QCDs, because those can end up on the same 1099-R potentially, not often depending on the age of the client. But what happens, especially if we're working with a single custodian, they're going to issue a 1099-R for the total amount that got distributed during the year.

So, if my client distributes $100,000 from their IRA during the year and $60,000 was a Roth conversion, and $20,000 was a QCD, and maybe the other $20,000 was withheld for taxes, maybe it was just distributed for supporting their lifestyle, none of that is going to be on the 1099-R in a clear way. The tax preparer is going to see how much came out of the account. They're going to see how much was withheld for taxes, if any. There are a couple distribution code boxes that are marginally helpful at best at times because there's only so many categories you can pick from. And then there's this incredibly frustrating box, 2b, that says, "Taxable amount not determined." And that box gets checked almost every single time, which to me just feels like a cop out from the custodian that says, "Hey, we didn't have all the information." I've talked to the custodians, I get where they're coming from. So then, if the first I'm hearing as a tax professional that any of this went on is in February when I get the 1099-R, and oh, by the way, I'm also trying to do hundreds of other tax returns, I'm not excited at the idea of, "Hey, I should probably ask a bunch of follow up questions." I'm frustrated that someone hasn't already communicated that to me.

Michael: Okay. So then, how do we as advisors turn this around? What should we be creating or communicating, or distributing, and when, to make this effective? My ears perk up to this. I'm hearing a thing that occurs on an annual basis for all of our clients very systematically. So, my brain is screaming, "There's a process to be created here."

Steven: Yeah, absolutely. In an ideal world for me, when the advisor recommends the strategy, they are explaining what the tax impact is going to be. Not just what the taxes are, but how they're going to get paid and what it's going to mean come tax time. And to your point, this is an annual thing we do with lots of clients. That can be a very quick discussion. We don't need to spend an hour of dissertation on how taxes work. This can be a, "Hey, Mr. and Mrs. Client, here's what this is going to mean come tax time. You can share this information right now with your tax preparer. If you'd like us to, we'd be happy to share that on your behalf." That's a great way to start those relationships if we don't already have them. And so, setting the expectation when the strategy is proposed, when it's executed. And then, I love a follow-up at year end.

The advisors I enjoy working with the most are the ones that have some kind of year-end tax summary, or 1099 letter we like to call it, where it's basically the advisors saying for each client, "Here's the things we did together that are going to generate a tax form for you to be on the lookout for." And depending on their relationship with the CPA or enrolled agent, maybe that needs to go to the client because you don't have a relationship with the tax professional yet. But it should be written in a way that the client could literally click Forward and send it to their tax professional, because it doesn't have to be overly complex, it's just a little bit of context. It could be as simple as "Mr. And Mrs. Client, I just wanted to remind you, as you get into the tax filing season, your tax preparer is going to need to know that we did this much of a qualified charitable distribution and this much of a Roth conversion, or that you had these three taxable brokerage accounts so you're going to get 1099s for all of them." All of that context is going to create better outcomes for the client, which, yes, does make the CPA's life easier, but really, we want to focus on, how do we create the most value for the client?

Michael: Well, and I suppose ideally, to the extent that the CPA has to spend time to look all this up, communicate with the client, figure it out on their own, if you are preemptively giving them information to answer it, either the client is getting billed less because it will actually take fewer hours to prepare their return, or the CPA is going to end out with an easier expedited return, either of which makes the CPA and/or the client very happy that this happens. You're putting real-time savings for the CPA on the table when you do this because they will have to take the time because they do have to get to an answer

Steven: Yeah. You're also reducing the number of IRS mismatch letters that go out because this stuff isn't going to go unnoticed. You're reducing the surprise at tax time because, again, if you don't have a relationship with the tax professional and we get to February or March, and the tax professional has to tell the client, "Hey, you have a $40,000 check you need to write to the IRS because your dang advisor told you to do that Roth conversion." That's the nice version of that conversation. I've talked too many advisors and taxpayers, both, who have been in those situations, and the advisor's the first one that's going to get thrown under the bus if there are unexpected tax bills, where if instead we go back to that of, when you recommended the strategy, when you executed the strategy, and then at year end you're reinforcing, "Hey, here's what the tax impact is, and here's how we set aside funds, or, here's how we already paid the taxes." We want to eliminate as many surprises as possible.

Michael: Because literally, there are folks out there recommending Roth conversions and not even fully communicating to the clients, "There's a tax bill coming, it's going to be about $40,000. You're going to need cash available."

Steven: Yeah. And some of it is, well, I guess in my experience, and maybe this is because advisors self-select out of my universe if they don't take a proactive approach because I know I hammer on these things, I would say more often it's that it doesn't get reinforced and communicated in a way that clients can easily come back to. Because if in May of 2025, we're talking about Roth conversions, and then the plan is to pay the taxes in March of 2026, if I only have one client meeting where I say, "Hey, this is what we're going to do. Client, please remember this," they're going to forget. They're going to forget the value proposition of why we're doing a Roth conversion to begin with. And so, having those touch points to reinforce it is going to, again, create better client outcomes that we eliminate, or at least reduce that pain of having to pay the taxes because taxes are always worse when they come as a surprise.

Creating An Effective Year-End Tax Summary For Clients And Their CPAs [16:01]

Michael: So, can you share more with us of just...I'm trying to think as just as practical and concretely as I can, what things should I be trying to make sure I summarize and capture in some kind of year-end summary? Normally, you said things that clients get tax reporting forms for, and gave some examples around things like Roth conversions and QCDs. I suspect for a lot of us in general, and particularly newer advisors, we have not navigated a lot of 1099-Rs through various versions of conversions, QCDs, how does a backdoor Roth show up? And we just don't know what is not patently obvious to the CPA already. Why does the 1099-B interest work fine for you but the 1099-R IRA distribution has holes? So, can you just help us a little bit more, what other things should I be trying to capture in a tax summary letter if I want to do this and communicate the right, helpful, useful stuff to the client's CPA?

Steven: It's certainly an area where getting your hands on actual tax documents is really going to reinforce this and help you learn this the fastest. And so, for newer advisors, hey, start with your own tax return. Start with your own situation and say, "Okay, what shows up on my tax return? And what was the source of that information?" Is this all clear if I didn't know my own situation? You can do this with team members. You can hand-pick a few clients to start with where you are making sure that you can follow that entire roadmap of, "Okay, here's where we started as far as the planning recommendation." That could be as simple as, "Hey, put money into a taxable brokerage account." And then making sure we understand, "Okay, now that we have money in that taxable brokerage account, here's what that could mean at tax time." There could be interest, there could be dividends, there's going to be both ordinary and qualified dividends. There could be capital gains distributions, which is a huge source of frustration for tax professionals and taxpayers both, who haven't had it explained to them of, "Hey, you could have income but have never seen the cash for it." That's endlessly frustrating for people who don't understand that concept.

And so, I know that the Kitces team does a great job of putting out resources around that topic. It's something that I spend a lot of time on as well. Some of it is, you just need to get your hands dirty and look at some actual tax returns and tax documents, because every money movement has a potential tax impact that hopefully you are noting and tracking in your CRM, whatever it is you're using, to be able to easily say and to have a process for us, you're not recreating at the end of the year, of, "Okay. With Bob and Sue, here are the accounts that we manage. Here are the things we did together. Do they or do they not have a tax form? Okay, great. Here's the summary of that. Let's send it off." The advisors who do this really well, this is a one-page summary. This is not a dissertation every year.

Michael: Okay. So, Roth conversions, QCDs, capital gain distributions, I guess, from funds. Do I need to be capturing all of my client's interest, dividends, capital gains? I get a lot of that. I mean, practically, for most of us, I can generate a realized gain/loss report from my portfolio management system often, I can generate an interest/dividend report from my portfolio management system. Is that stuff helpful as well, or is that relatively well covered by standard tax forms?

Steven: Yeah. From my perspective, I'll take all the information you're going to give me, but practically speaking, what I'm more interested in, especially on the interest and dividend side, is just, "Hey, how many accounts are out there, and how many 1099s should I be waiting on?" And so, I don't have many advisors who try to send me estimates of what their total capital gains or dividend income's going to be. But they will give me a summary of, "Hey, for this client we work on together, they have these three taxable brokerage accounts, all of which we'll put out a 1099 this year." Because you quickly commented on earlier, the 1099-B tends to be a lot more thorough in what we need for tax prep than the 1099-R is. And so, as a tax professional, I'm going to be excited if you just tell me which 1099s to expect, and then give me that a little additional context on the 1099-Rs that tend to be a little bit lacking.

Michael: Interesting. So, that's helpful framing. Because again, I think for us the clients have accounts and tax forms get generated. I don't think it would occur to me that it's actually very helpful to just communicate, "You're going to get three of them."

Steven: Yeah. And that's, that seems super simple, but...

Michael: Just so you know, when you've got three, go ahead and do the return. When you've got two, wait. It's not going to be ready yet."

Steven: Yeah. One that we learned a few years ago that's super helpful to add to that list is to make sure that you are including closed accounts. Because in the client's mind, especially if you switch custodians or they're new to you and you've moved money between custodians, at the end of the year, they might be thinking, "Oh, well I just have those two accounts with Fidelity." But maybe at the beginning of the year, they started with four accounts with Schwab and things got moved around. And so, if they're just thinking, "Hey, I've got my two Fidelity accounts," and then I go ahead and prepare the tax return based on those two Fidelity accounts, and then I've already filed the return and I find out these Schwab accounts, or we get an IRS mismatch letter because the Schwab accounts were reported. And so, closed accounts, anytime money moves between accounts, rollovers, which again might seem simple.

It's certainly the exception, not the norm that incorrect 1099s get issued, but it does happen. I've personally had experiences where we get a 1099 that lists an amount as taxable. And since I work really closely with advisors, I tend to have just a little bit more context anyways, but it gives me that moment of pause to say, "Hey, wait, does this make sense that a mid-career professional who still earn earning $600k a year also had a taxable distribution of another half million dollars from an IRA? Maybe I'm missing some context." But that's easy for me to say because I work constantly with financial advisors. For tax professionals who don't, "Hey, the tax form says it's a half million dollars taxable income, so great, let's report it and move on."

Michael: And they don't stop, think, "Maybe that was a rollover. Maybe there's a matching 5498 coming. Nobody told me to wait for the form. I just reported the ones that my client gave me and moved on."

Steven: Yeah.

Michael: So, it's helpful just to think about, "How many 1099s are coming? Because just the actual exercise of pre-quantifying the counting is helpful. How many are coming? And then once I know how many are coming, additional information about the 1099-Rs in particular, because those are the ones where the distribution codes are often inadequate.

Steven: Yep. That's a great starting point. And just like anything else we do in practice, for people who aren't doing any of this yet, start simple and build from there. If the first year you do this, all you're doing is running a report at the end of the year to say, "Okay, what accounts do I manage for my clients? Let's tell them about those accounts and where the 1099s are coming." Great. Start there and build. I have advisors who've been doing this for years. And every year, they look for new ways to improve this. A recent change one of these advisors made was including for us the timing of the Roth conversion, particularly when the taxes weren't paid at the same time the conversion was made. So, as the tax professional, we can communicate that to the IRS because there's potential for underpayment penalties and interest for a Roth conversion that was done late in the year because by default, the IRS is going to assume that income happened evenly throughout the year unless we go in and proactively tell them differently.

Michael: So, how many forms, additional information about the 1099-R, and it sounds like here, we're getting at Roth conversion amounts, QCD amounts, timing of conversion, tax withholding that was or was not done, or I guess estimated taxes that were or were not paid so you can figure out whether we've got penalties or how to navigate around them. Anything else that's helpful from the 1099-R perspective?

Steven: I think that pretty well covers it, Michael. It's just, any of that additional context. And again, for advisors who haven't looked at a 1099-R recently, or just aren't familiar with them at all, get your hands on some of them. Any of your clients who have qualified money at some point are going to end up with a 1099-R. And so, take a look at some of those. Especially for your clients who have some of these situations that we're talking about here, if you can go pick those up and say, "If I only had this form, here's the other pieces I wouldn't understand."

Michael: So, for those that have been doing some of this and are still trying to, I guess, up their game further, what else? What are the slightly less common additional forms or scenarios or things that would also be helpful for you as a CPA advisors would more proactively communicate? Where else did the gap show up for you where you can't prepare the return? You're going, "I wish the advisor had just told me this."

Steven: It gets a little bit harder to judge on other things because some of it's knowing your clients and how well they understand their own situation. Because it's amazing to me all the things that people don't assume have a tax impact. Sometimes it's from advisors, not the client themselves. Even though I try to ask as many questions as I can, it's still from the advisor that I'm learning about people considering moving or selling a rental property, or a potential capital gains event. And sometimes these are things that haven't quite happened yet that now that we know about them before they've happened, we can step in and give some context or advice from the tax planning standpoint of things to consider.

And so, what I've found, and some of this is just a business model thing, that advisors seem to tend to work with more in the 100 to 150, 200 at the very most, families or clients. Tax professionals, geez, I know CPAs who personally prepare 800-plus returns. We keep our team at a much, much lower ratio, but still, everybody on my team is working with more taxpayers than an individual advisor. And so, just naturally, that leads to, the advisor tends to have more in-depth and more regular conversations with a client than a tax preparer does. And so, again, any context we can share about new jobs, changes in employment status, we're thinking about starting a company, these things that the advisor knows is going to have a tax impact, but maybe assumes the client is going to share with the tax professional, not knowing for sure if there's even a way for them to do that, or there's going to be an opportunity for that. I tell advisors and taxpayers both, "I would rather you share too much information with me and let me decide what's relevant and I'll help coach you along the way."

Best Practices For Advisors To Communicate Tax Planning Strategies To CPAs [27:12]

Michael: So that's a lot of the tax preparation end. Where or how does this change if we start talking about the tax planning side of things. How do we make sure we're working well and being good partners to the client's CPA and the, what would be the other approximately eight months of the year where we can do tax planning outside of the core brunt of tax season? Because I know a lot of advisors that just had, I'll say, varied experiences when they get into domains, like, "Well, we want to recommend a Roth conversion," and we've got software we can reasonably approximate what the tax impact's going to be, "Should I do that? Should I still call the CPA? Is it too much work and trouble to call the CPA? Is that going to be awkward? Is the CPA going to bill the client? Should I just do it on my own?" I hear a lot of confusion as we're just trying to figure out what really is the best way to work with a client's tax professional, even though we often don't prepare the returns, we are increasingly coming into the tax planning lane.

Steven: Yeah. I'm certainly seeing the same trend where more and more advisors are telling me that their clients are coming to them for tax questions, even when they have a CPA or an enrolled agent because their tax professional's just not giving them the time or insight. And so, we're certainly seeing a lot of that. It's getting asked to the advisor more often. Definitely happy to get into specifically, how do we bring up tax planning? But I do think this comes back to how we build relationships with other professionals in general because there is a wide range of outcomes that advisors share with me when they're reaching out to tax professionals for help. But where the most positive things are happening is where there's a relationship that's been built over time and reinforced and really one that centers on, how do we both help the client do more?

And so, to make that a little bit more specific, the two top things that come to mind for me that I see advisors get wrong quite often, and that I absolutely hear from other CPAs that make a difference when advisors will do this, one is understanding the timing. And I don't just mean that of, hey, don't call somebody on April 10th. Just like any other professional, CPAs want to be treated as experts and peers. And so, if you are reaching out on December 20th and saying, "Hey, we're doing this thing with the client. I just wanted to let you know," you're not treating me as a peer, you're not actually asking for my input, you're just reporting to me. And I'm not interested in that. If you actually want my opinion, we need to be talking during the summer or the fall, a time of year where I'm not crunched at the deadline, and that it's clear to me as the tax professional that you actually value my input. You've given me a chance to give input at a time where a change could be made if one was needed.

Even if you, as the advisor are 99.9% confident that what you are proposing is the way the client should go or what you're ultimately going to recommend, how we approach these conversations makes a huge difference. So, the timing's a piece of it. And then how we're approaching that communication. Are we leading with, "Hey, I wanted to get your input. I would love some insight. I know you're an expert in this area," or are we just telling somebody what's already happened? And so, the more we can treat other professionals as professionals, the more we're going to get that mutual respect.

Michael: So, I guess I just have to ask, are all accountants this way? Should I anticipate this is going to go well in all instances? How do I navigate things? Am I going to generate a bill for my client if I call their CPA about this? How do I understand or going to handle on who's going to work with me productively, who's not, who's going to generate bills for the client that the client may not be happy with? Help me navigate this a little bit more.

Steven: Yeah. In my experience, this is primarily what I hear from advisors since as a CPA, I'm not out there chasing down other CPAs to see how their services are going to work, but what I'm hearing most often is that it's more the exception than the norm that the client's getting a surprise bill, although it does happen. And so, that's a question to ask upfront, to be able to say, "Hey we both work with Bob and Sue. We have some tax planning questions that we'd love to be able to run by you. Happy to pay for an hour of your time." However you kick that off to make sure you understand what's going to happen. The other thing, just like when we talk to our clients, when we talk to other professionals, we want to make sure it's clear what the value proposition for them is. If all we're doing is asking for favors, we're not going to consistently get good responses because why are they going to spend their time doing favors for you?

So, we want to make sure it's clear what the value proposition to the client is of why we're recommending it, how it's going to make tax time easier for the CPA by talking about it ahead of time, what you as the advisor are going to do to make sure that you're not creating headaches. I've seen a lot of success from advisors who even just lead with that of, "Hey, you probably work with other financial advisors who make your life a lot harder. I want to make sure I'm not one of them. Can we chat about how we can make your life a little bit easier?" Just leading with some of that can make a big difference on how that kicks off.

Michael: And so, when we get into domains, more and more of us have tools like FP Alpha and Holistiplan, we can even start doing versions of these projections. Help us understand from the CPA's perspective, is this helpful? Does this feel like we're encroaching on your proverbial territory? Is this great because you just save time for an analysis I didn't actually want to do by hand myself and I'm just happy if you do that, and I can just check your numbers? What's the mindset for CPAs as we start doing more of this tax planning, tax strategy work as advisors?

Steven: You're definitely going to get a whole spectrum of responses. And this is part of the work you have to put in. If you're serious about doing better tax planning for clients, you are going to have to put in some work vetting different tax professionals, and who is a good partner to work with, and who's not particularly responsive or helpful. Because for me and the advisors I work with and the ones I'm most excited to work with, they're tax planning-minded, and so they're not coming to me from zero. They're not just coming and saying, "Steven, here's this client. You tell me all the tax things." A lot of times they come with a Holistiplan report or something similar where they say, "Hey, here's some context we know, but we want to make sure we're going in the right direction.

And so, I really appreciate that because then, I get to see what they're already thinking about. And so, for me and my team, it's not, "Okay, then we're going to rubber stamp it and send it back." But then we get to see the direction they're going in, we get to see their goals they're trying to accomplish. Because by nature, tax professionals tend to be a little bit more math-focused than client or goal-focused. And so, if you ask me a math question, I'm going to give you a math answer. And so, I like being able to see that context just to see, "What was it you were trying to accomplish? Was the goal to do the biggest Roth conversion possible? Is it to do them intentionally over the next five years before we hit another major income source?" And so, understanding that context is going to help me and my team do the best as we respond to the advisor.

But you're definitely going to have CPAs who take it personally that you would even step into the tax realm. And then some of that is also the framing again, of when we come to them to just say, "Hey, we threw this together using this piece of software, but we really want to make sure we're taking care of our clients. And so, we would love an expert opinion. Can you give us an expert opinion?" And then you're approaching them as the expert that they are and not trying to pit them against the software.

How Retirement Tax Services Works With Financial Advisors [35:07]

Michael: So now, give us some further context on just your actual business, what you do as a tax firm.

Steven: So, Retirement Tax Services, I started in 2021, really, with this idea of, how do we improve this collaboration? How do we improve the client outcomes? And so, I spend part of my time and part of what the company does is help advisors understand better, not just how the tax planning principles work, but how we communicate them effectively, both with clients and with centers of influence. We provide a lot of resources and education for advisors around how they can do this stuff in practice. So that's one piece of it, is, how do we help advisors elevate themselves and what they're doing for their existing clients? The other side of it is much more hands-on. It's driven by the sheer volume of advisors I hear from who can't get CPAs to return their phone call. They can't get CPAs to respond to emails. A lot of them use different software tools. They're getting better at using AI for these things. But at the end of the day, they still want that human confirmation from someone they can talk to and trust.

And so, we have a level of membership that we work with advisors where they get access to all our materials. And then Michael, I just do office hours twice a month for those advisors where we get together in small groups and sit down and go through these things together to say, "Okay, great. Here's what Perplexity said, here's what Google said." A recent example was on health savings accounts where it's, "Okay, I can see the contribution limits and I can see how I can reimburse a prior year expense, but what about these three other situations that I came across that I just never heard of before and Google's not giving me the answer on?" And so, that access has been incredibly valuable for advisors that it's not only that they're getting to talk to a CPA, but one who understands financial planning and speaks their language.

And then as a bolt-on to that, we have a team that does the actual tax preparation for clients of financial advisors so that they ultimately have a partner that, again, they know understands the financial planning side so that these planning strategies don't get negative reviews come tax time, and that we can work collaboratively to make sure that that reporting piece at the end of the execution happens correctly.

Michael: So I hear you describing, I think you said membership, you used the word members. Help us understand a little bit more then. What are the membership tiers or offerings? How does this work?

Steven: Yeah. It basically splits into two memberships, we call them Essentials and Premier. The Essentials membership is, "Hey, I'm an advisor who wants to learn how to do this better." And we've got advisors in that who are brand new to tax planning or financial planning, and they're really trying to learn the basics and build from there. We've also got advisors in there who basically say, "You know what, tax planning is really important to me. I've got a lot of experience in it, but I'm tired of having to decide what's most important this month to think about or talk about." And so, really, they come to us to have a more targeted and focused set of resources around tax planning. And so, it's a combination of in-depth content with a lot of scripts and handouts and reference guides that advisors can use with their clients to try to make this stuff easier. Because really, we measure our success by, how are we helping people take action?

I make the joke all the time that I don't have the tax code committed to memory, so why would I try to get you to commit it to memory? I'm trying to give you things you can use with clients. So, that's the Essentials side. It's very much a one-to-many, come and get access to the resources. These are things that real advisors are using in practice all the time and having a lot of success with. One of our checklists specific to reviewing tax returns has been used by over 1,000 advisors. It's really cool to see how much excitement there is about this topic.

Michael: So, what's the checklist? I'm always fascinated by checklists. So, tell me more about the checklist.

Steven: Yeah. It's literally called our 37-Point Checklist On Reviewing Tax Returns. I didn't win any points from a marketing standpoint of clever names. I'll be totally honest, the 37 is not even an accurate number because I think that got written on an agenda somewhere that, hey, it's going to be called the 37-point checklist. And then they gave it to me to build. And I said, "Well, I have a lot more than 37 things, so I'm just going to do sub bullet points." So, there's a lot more than 37 points in there.

Michael: So, there's 37 including some sub bullet points, but it was easier than rebranding it to the 43-point checklist?

Steven: Or the 58. Yes, exactly. Michael, it's a list of all the things that I go through and check, that I have my team go through and check. The other thing I try to be super transparent about is, in all of the stuff that I do, I don't have proprietary secrets on tax strategies you've never heard of before. I'm not your guy for accounts in the Cayman Islands or private letter rulings. I'm not the one pushing the envelope on what the IRS is going to allow. I'm trying to help clients and advisors consistently do the simple things over time that make a difference on their tax bill. And so, we're just hyper focused on what, does this actually look like day to make progress?

Michael: Are you willing to share one of these resources or checklists with folks who are listening if they want to really see what one is like?

Steven: Yeah, absolutely. I did come prepared. Actually, I've listened to a lot of your episodes. I'm a big fan.

Michael: Appreciate that.

Steven: I've got a couple of things that I'll make sure I send over that you can share freely with your audience that gives an example of some of the things that we do.

Michael: Awesome. So, I guess, so for folks who are listening, this is episode 459. So, if you go to kitces.com/459 and scroll down a little bit to the show notes section, we'll have links out for the, I guess, checklist. Just because now we talked about it, is the infamous, now infamous, 37-Point Tax Checklist one of the things that folks can expect to find when they come in and take a look at some of the examples?

Steven: Michael, for you, I'm more than happy to share that

Michael: I appreciate that.

Steven: To reinforce this idea of, hey, really, we're focused on helping execute the simple things over time. The other one I'm going to send you because I think people will be interested in it, and we've got a great response on, is a newsletter and worksheet that we put together on the primary home sale exemption. You have a very sophisticated audience, I'm sure many people are familiar, but just so we're all talking about the same thing, this is the exemption that we get for selling a primary residence with a couple of caveats of how you qualify for it living in the house or two over the last five years, those kinds of things. It's potentially very lucrative though, because for single filer, it's $250k, for a married couple, it's up to $500k.

This is an area where in really simple situations, it's a simple concept, and we don't need to spend a lot of time on it. But basically, the newsletter and the worksheet go through, okay, but here are all the exceptions you might not have thought of. And here are the things we need to be thinking about ahead of time. So, again the primary home sale exclusion is not something I came up with. I'm not the gatekeeper on that. But we're organizing in a way, we're giving advisors scripts in a way that it makes this easy for them to have those conversations with clients.

Michael: Okay. Very cool. Very cool. So, then, that's Essentials, so I'm understanding now. So, one-to-many, a lot of these kinds of checklists, newsletters, resources, scripts, talking points ways that I can have these conversations with clients around various tax planning strategies. So, then I think you said the next tier is Premier. So, what's Premier?

Steven: So, Premier just builds on that, access to all of those things. The biggest difference on Premier is that then they get access to a CPA who speaks the financial planning language and is going to help them get these things done for specific client situations. I mean, I'm vaguely saying a CPA. I do mean me, I run those office hours. I have a team behind me that definitely helps with, especially questions that are submitted ahead of time so that we're pulling good research together. But we're just hearing from so many advisors who just couldn't get responses or couldn't get somebody to just sit down and have a conversation with them, and we said, "Great. Here's how we're going to make sure that you can timely get stuff done with clients."

The other thing, and in the gap between when we record this and when it airs, that we're working on rolling out is helping advisors really have a concrete plan for how they're going to build these relationships that you and I have been talking about here, Michael, because it's an area that we get a lot of great feedback on when people follow our advice on how to do this. And so, we're working on making it a lot more structured of giving advisors a ten-week roadmap of "Here's what you're going to do every single week to really build these relationships with tax professionals in a way they're going to create better client outcomes, they're going to build stronger relationships," that ultimately, part of the goal is that they will lead to referrals and growth, but that there's wins along the way. So, that's another key piece that's coming with Premier, is, okay, not only are you going to get the tax education, the tax resources, we're also going to give you this roadmap that we've seen work time and time again for other advisors in our program that help them grow their business.

Michael: And so, the structure of things being able to get a CPA's input on a situation, I think you said, so that's an office hours format? So, that's an open environment, come and bring your challenge, some others may as well, and we can talk through all of these together?

Steven: Yep. So, we run it in a small group format. So, it's other advisors who are also really committed to tax planning. So yes, I make sure the advisors know, hey, we're not going to talk about confidential client information in there, but we will get client-specific. And they're all on the calendar. Everybody knows when they're coming. They have the ability to submit questions ahead of time. Sometimes people are great and submit lots of questions. They're all kind of prepared, and we can go through them. Sometimes it's, "Hey, what's top of mind today, guys?" Or like this summer when Congress decided to change some of the rules on us, we definitely spent a few office hours talking about, "Okay, here's what this means." And so, that's where, especially at that Premier level, and then we'll talk about tax prep in a second, but the core of that Premier level is really getting that additional access so that instead of having... How this plays out in practice, Michael is, instead of before, for a lot of advisors, where a tax question would come up and the advisor says, or thinks, "That'd be great to run past the CPA, but I have no idea. If we can get one to respond." Our Premier members can say, "Hey, great news. I'm part of a program where twice a month, I can sit down with a CPA who does this kind of stuff all the time. The next one's on such and such date. I'm going to take this question to that meeting and I'll let what feedback I get."

Michael: So, how often in practice do these run? Do you offer office hours?

Steven: We run them twice a month.

Michael: Okay.

Steven: Because, Michael, what I've found is that as long as we're setting clear expectations, very seldom is a tax issue really like a fire drill that we have to put out tomorrow. Those will come up. That's really the rare exception. And really, if it's that desperate of a fire drill, you don't want to come to me as a CPA who's not actually contracted with that.

Michael: You just really need the client.

Steven: But I need to talk to the actual CPA or find a tax attorney. And so, just being able to shift from, "Hey, good luck asking your CPA," to, "Hey, on this specific date, I'm going to go ask this question for you," it creates way better client outcomes.

Michael: So, how do these tiers price, how does it work from a cost perspective?

Steven: We're in the process, again, between when we record this and when it airs of, we've had the same pricing for our membership since we created them four years ago. And so, this fall, we will be going through a price increase on it. And if somebody listens to this episode and we've already increased the price and they mention this episode, I'll be happy to grandfather them into the old pricing that I'm going to mention. Right now, the Essentials membership is $197 a month, and the Premier membership is $497 a month.

Michael: Okay. And again, primary difference is access to experienced, trained human beings. So, your difference there is time access to expertise used appropriately.

Steven: Yeah. And what we're hearing from advisors is it's really not even a price comparison of how much could they pay to get that service somewhere else. They just can't find that service anywhere. They can't find CPAs who will return their calls. Our premier members also get a ticket included with their membership to our annual summit that's each fall. Like I said, we're working on rolling out more targeted roadmaps for helping advisors build those COI relations, those CPA relationships, and make those valuable. We also give our premier members the opportunity to white label any of our materials. That's always an interesting one because we get a lot of people who ask about it, and fewer people who take advantage of it, because you definitely run into bigger compliance hurdles if you want to put your logo on it versus leaving the CPA's logo on it.

Michael: And so, is that the full breadth of the offering at this point?

Steven: So, then for our premier members, as our tax prep team grows, that's who we go back to first to offer any tax prep capacity, because as we're recording this podcast, we have about 35, I think the actual number is 37. I know that seems really convenient with my 37-point checklist. But right in there, we have a few dozen advisors who we do tax returns for their clients. We have a separate engagement letter with the clients, just from a compliance and legal standpoint, we have a relationship directly with the client, but it's all collaborative with the advisor. And so, that ranges from advisors where we do a handful of returns for their clients, and we have some where we're doing for a specific advisor, we might do 60 or 70 returns.

And so, all of those advisors we do that work with are premier members, and that's who we go to first. Actually, later today as we're recording this, I'm meeting with another advisor who's onboarding into that program because we were able to find and hire another CPA under our team. We're also in the process of hiring some essentially tax admin, tax support team members so that we can continue expanding our capacity, which is really completely driven by advisor demand. If it was up to me, I would love to spend all my time on the tax planning stuff, on the education stuff, that's more fun for me, but as of yet, there isn't an automatic way to file everyone's tax returns. And so, we're going to keep providing that service as well.

Michael: I guess what I'm just trying to visualize, how many return... As a tax preparation firm, in addition to the education side, how many returns do you guys actually file? And how many preparers are there?

Steven: So, for this last tax filing season, so the 2024 tax year, happened at the beginning of 2025, our total number was about 570. And that included myself, another CPA on the team, a tax preparer who's working on becoming an enrolled agent. And then we have some kind of operational support people who don't have tax experience. And then we did use some outside contractors that we already had experienced with from a prior year to help do some of the prep, but none of the client interaction on some of those returns as well. So, we do try to keep our ratio very, very small because so many people have less than amazing tax prep experiences, but we're really focused on, how do we change that experience in that model?

Michael: Well, it's a version in the tax world that it is in our advisor world. For all the advisors out there who say like, "I'm really high-touch," or not, I'm like, "Just tell me how many clients you have in total." There's only a certain number of working hours in the year. I can divide your client count by working hours and get a sense as to how high-touch you really are. You can't be super high-touch with hundreds and hundreds of clients. There just literally aren't enough hours in the year.

Steven: Yeah. And you have advisors who will kind of rotate their timing of when they meet with different clients. But not only do all those clients need to be touched, but they all need to be touched at the same time of year, multiple times to get a quality job done. And so, it definitely creates a bottleneck that needs to be addressed proactively.

Michael: And so then, how do you price tax preparation services?

Steven: So, up to this point, we've been really focused on working with individuals and families. We intentionally did not dive into business owners for a couple of reasons. One is that the traditional kind of CPA is raised on this idea of, "I want to work with the most complex. I want to work with business owners. That's what I'm after." And so, you have a situation where a lot of your average financial planning clients are wildly underserved by the tax prep world. They're either stuck with Turbo [Tax], [H&R] Block, or their local CPA that's just grinding out 1,000 returns a year, or they can't find anybody who will take them on. And so, we intentionally started with, "Let's target these people who are very underserved, but are all working with financial advisors."

And so, since we started so narrow, it made our pricing a lot easier out of the gate. And so, right now, most of our clients pay between $800 and $1,200 a year for the tax prep as well as...the way we describe it is, "We then become your tax help desk. And so, if questions come up during the year, if you get a love letter from the IRS, you're going to reach out to us, your advisor's going to reach out to us." And that's just part of our ongoing relationship.

Michael: Okay. And it's because at the end of the day, you are deliberately not working with business owners, because the other CPAs tend to go after them already. So, not a lot of Schedule Cs, you're not doing business returns, it's a lot of people who get various versions of W2s or 1099s to capture almost everything, but that still has to be reported properly and supported with the advisor.

Steven: Yeah. So, we made up this term called moderately complex tax return. So, that's who we work with, people with moderately... Because nobody thinks they have a simple tax return.

Michael: Yes.

Steven: So, for the seasoned tax preparer, they're going to look at what we do and say, "No, that's the simplest stuff." And that's fine, that's your opinion. But for the client, they don't think it's simple. And so, we work with a lot of mid-career professionals and a lot of people who are near or into retirement, a lot of people who work with financial advisors. And so, a lot of W2s, a lot of 1099s. We do work with some Schedule Cs and Schedule Es, but the Schedule Cs are more of, "Hey, I picked up a side gig. I'm doing some consulting. It's really getting paid for my time." We're not doing any physical presence-type businesses because that gets into a whole different realm of taxes we just don't have...

Michael: Now you got to do depreciation schedules of equipment and a whole bunch of other stuff.

Steven: All of those things. We do get asked a lot, because we also don't currently do trust returns. And so, the top two requests I get from advisors is, "Hey, when are you going to do my business clients? And when are you going to do our trusts?" And every year after our filing season, we look at our team, we make decisions about hiring, and we very intentionally go out and look to hire people who can help us expand that. It is a wildly challenging process to find good resources in the tax world, but we recently hired a CPA who comes to us with a lot of business experience, and so this most likely it'll be for the 2026 filing season, that's something that we'll start expanding into. And just like everything else we do, we always come back to our existing members first to say, "Hey, here's a new service we're offering. Would you like to take advantage of this before we make it public?"

Michael: Because now you as with basically every other CPA firm that we as advisors tend to reach out to, your capacity is constrained because there's a basically national CPA shortage.

Steven: Very much so. And I'm sure there's a lot of advisors listening to this who can also appreciate this side of it that as the owner, as the CEO, whatever title I want to give myself in a small business, once I've made that commitment to an advisor or their clients that, "Hey, we're going to do your tax returns," that then falls on me if someone gets sick, if someone chooses to go a different direction in their life. And in the four and a half years I've been doing this, we've had all of those things happen where it's, "Oh, we went into the filing season expecting these kinds of resources and this number of returns, and then something changed outside of our control, but we're still responsible for getting that work done." And so, that also very much influences how intentional we are about expanding our capacity. Because based on the phone calls and emails and DMs I get on LinkedIn, we could probably easily double the number of returns, triple the number of returns we do if we weren't committed to that incremental growth to maintain and improve the quality that we offer.

Michael: Okay. So, very much the professional services founder dilemma when you start going multi-professional, whether it's preparers in an accounting firm or advisors. On our side of the business, the moment you start having other professionals who take on clients, somewhere in the back of your mind, you also are doing the math of, "And if they leave, and these boomerang back to me, what's my plan? Can I do that? Can I survive? Can I rehire? What's going to happen to the clients? How do I maintain continuity of service?"

Steven: Yeah. It's a very real concern.

Michael: So, is the goal to continue to grow and scale the tax preparation side of the business? Or is the idea "No, we're actually more energized to build the other two membership tiers that are more education-oriented than the one that is hands-on tax preparation?"

Steven: The goal is to build them concurrently. And the tax prep side is more out of need than out of excitement. Because I was very serious when I said before that, tax planning only counts when it gets reported correctly. And if the advisors I work with are already telling me they can't find anybody who will take their clients on, if I then stop offering that, then a lot of the things I'm explaining to them are going to run into that barrier at some point of, "Well, we can't find people who will report this." And so, yes, we want to do it systematically, but we absolutely are committed to continuing to grow the tax prep offering because it's a major gap in a lot of clients' professional lives.

Michael: It just fascinates me overall that we very much have a national shortage of CPAs these days. AICPA is literally retooling the CPA exam requirements to essentially make them a little bit more flexible and less stringent because they can't get enough people in for the demand of accounting services. And to me, then it shows up everywhere, we can't find good CPAs for our clients who have any capacity. We call firms like yours who are doing it and expanding capacity, but can't expand as quickly as we have demand for it. A lot of us are now trying to hire it in-house. By our own productivity research study that we did last year, almost one in six advisory firms are now doing some level of in-house tax preparation.

But for a lot of the advisors that I talk to that are doing that, they still ultimately have the same challenge, which is, "Well, okay, I decided to bring it in-house, but I still can't find a good CPA. I couldn't find a good CPA for my clients to work with. So, I decided to do it myself. And it turns out I can't hire them anymore than I can find them in another firm because there just aren't enough of them. There's just a shortage." It's an interesting meta level problem that when there just aren't enough people almost any configuration of this, and you're still in some way, shape or form butting up against the fact that there just aren't enough people doing it.

The Value Of Reducing Friction For Clients When It Comes To Tax Planning [59:47]

Steven: Well, and you mentioned the research that you guys have done, which I love when you put out that research, it's so helpful to have real data behind these things. But some other data that actually our friends at Jump AI were just sharing with me as they pull information from client meetings, because this is going to highlight why we're so committed to the tax prep side. So, I was working with them. They invited me to essentially be part of their insights advisory council to help give input on things they should be trying to pull out of their meeting transcripts so that we can all learn and improve from what actually goes on in client meetings. And so, I gave them basically a big list of questions of things I was curious about specific to Roth conversions and really specific to how often do they actually get done when they're recommended, and what's standing in the way.

And from a statistical standpoint of doing all the data research, the single biggest factors that impacted whether a client followed through on an advisor's recommendation of doing a Roth conversion was basically how easy they made it to execute and report on the planning strategy. It all came back to, are we removing the friction? Are we making this easy the whole way through? And so, to me, that reinforces there's a need for end-to-end. If we're committed to these strategies that we think are valuable for our clients, we want them to follow through on this stuff, we have to have a way to help the client see, "Okay, am I'm going to be able to get this done without a whole bunch of huge extra headaches?" And so, that might be bringing it in-house. Although I hear mixed reviews from advisors who have done that some of the things that you're talking about. It's hard to find resources.

That could be collaborating with RTS or someone like me who goes out of their way to collaborate with financial advisors. Actually, Michael, it was a little bit shocking to me just how big the gap was of as Jump queried these meetings and ran their reports on it, it was only like 20% of the time that an advisor recommended a Roth conversion did it actually get followed through on, which was mind-blowing to me. That wasn't 20% of the time that it got brought up, it was followed through on, it was, the advisor actually recommended it and only 20% of the time did the clients execute. And again, as they mine that data, the biggest determining factors on who followed through was how easy the advisor made it to execute on the strategy.

Michael: Interesting. Because clients are like, "I don't know how to report on this. I don't want to have to deal with it and figure it out. I don't want to screw up my tax return. I can barely get my own CPA on the phone to ask them advice."

Steven: Yeah. Because think about it, if you present a Roth conversion to a client, and let's even assume that you did a great job with the value proposition of why this is important. But if that ends with, "Oh, and Mr. And Mrs. Client, you're just going to sort this out with your CPA and they're going to take care of it from there," if they're already not getting good service from their CPA, if they're already getting poor responses, that sounds like a big hassle for me to pay more taxes now because we're already asking them to do something meaningful.

Michael: Yeah. I still kind of have to assume that the number one reason why clients don't do Roth conversions is they just don't want to pay the bill. Most of the conversation is explaining to them why that's actually a good thing for them in the long run. But even if you can win them over on that, if they're anxious about how it's going to get reported, that can quickly go downhill.

Steven: Yeah. And Michael, it's helpful. I'm happy to share the results of that information they pulled for me as well so that people can see the data behind it.

Michael: Yeah, please. If you've got something to share there, again, we will link it in the show notes. So, this is episode 459. If you go to kitces.com/459, we'll have a link out and, I guess, shout out to the Jump AI folks for collating some cool anonymized data for us on what's really happening in actual client meetings.

Steven: Yeah. I always love it. And we can go back and point to real client meetings to make theory reality.

How Artificial Intelligence Might Support Tax Firms Amidst A Shortage Of CPAs [1:03:52]

Michael: Yes. I'm genuinely curious just because this is your chosen profession that you live. How do you think about this dynamic of just there's a shortage of CPAs, there's a shortage of tax preparers. Can we attract more people in? Is it just, "Hey, if you're an advisory firm that thinks you want to do this, don't go looking for an experienced person, just accept that you're going to have to train someone up to become a CPA, or at least to become an EA [Enrolled Agent] to be able to do it?" Are there AI, like the next generation of AI going to be good enough to do all these tax returns? And do we solve it that way? How do you think about this as someone who lives the profession?

Steven: Maybe it's just my personality to be endlessly optimistic. I do have hope for the future of this industry, even if it's going through a challenge at the moment. I do think that AI is going to be a piece of that. And I'm actually looking forward to that because so much of tax prep is data entry and data organization and data verification, those kinds of things that AI is really good at. And so, I would gladly leave all of that behind and just focus on that 10% or 20% that only I can do. And maybe AI takes that in 20 years as well. I don't know. But I look forward to the tools catching up a bit more. And they're going pretty quick at this point. The concern that comes along with that for me is that then how are we going to keep training people in those foundations?

Because if you don't have that foundational knowledge of how this all works, it's tough to be really good at the planning side of it. And so, I get a little bit torn on what the balance there is. And I think that's been part of the struggle in the accounting industry over the last decade or more already, is that some of the training and apprenticeship model has faded away a little bit because there's so many other opportunities for accountants to do other things besides traditional public accounting. So, I definitely think we'll see more of that. I do think we'll also see more of a globalization of accounting services. And not what we all think of as outsourcing 30 or 40 years ago where everything goes to a call center strictly to save costs. It really comes down to finding qualified people who are willing to do the work.

And so, I'm meeting more and more, even small business owners, this isn't even just a big firm thing, who are saying, "Hey, I can't find qualified people who will apply for the job here." So, I'm meeting people who are hiring people in South America, in the Philippines, and Eastern Europe.

Michael: There's lots of talented people who do not have the best local opportunities and these are great-paying professional services jobs…

Steven: Yeah. Because it seems like outsourcing was originally just viewed as this cost-cutting measure, that it was just, "Hey, somebody's just being greedy and wants to squeeze their margins." And it's really to the point where I think in a lot of industries, it's, "Oh, you just can't find the help, so we've got to go where we can find the help."

Michael: Yeah. It fascinates me including, especially with where we are in the financial planning realm. I have a lot of very experienced CPA friends who just keep saying like, "This whole accountant shortage, this is the natural outcome of TurboTax and the like showing up on the internet 20 or 25 years ago." All the "simple" tax returns that used to be the entry-level job fodder got sent to technology. And so, in the short term, it was really cost-effective and price-efficient and all those good things. And they gutted their own young CPA pipeline. And so, lo and behold, a bunch of CPAs who were not preparing basic returns 20 years ago is a bunch of CPAs who are not experienced CPAs today, because they effectively lost their career path.

And to me, it's striking because we now may or may not be on the cusp of the same dynamic as advisors as AI starts showing up and taking things like meeting notes that used to be a great place for financial advisors to learn client meetings from senior advisors and saying like, "Well, hey, why have an advisor take notes? It's arbitrary, tasky busy work. Let's just give it to the AI tool to do it." And frankly, the AI tool probably often does it better and takes more comprehensive and effective notes. And are we going to have issues in ten and 20 years because we winnowed down our advisor talent pipeline today with technology and then didn't create the entry-level job opportunities for tomorrow's professionals?

I don't know. I don't want to over-construct that parallel, but I hear from a lot of CPA friends who point the finger back to, "This is where it started downhill for CPAs," and start looking, thinking like, "Ooh, are we on the cusp of one of those moments as advisors now?" And again, the CPAs are still around, the tax software didn't take jobs from the experienced CPAs, but it did take jobs from the new CPAs, who then didn't become experienced.

Steven: Yeah. I still know lots of CPAs who are actually practicing who remember when software wasn't doing any of the work. And so, this stuff definitely changes rapidly. And again, it probably just goes back to being an endlessly optimistic person because on the bad days, I worry about those things, Michael. And then on the good days, I think about, "Okay, well, Vanguard and robo-advisors were going to put all financial advisors out of business." There's always these things on the edges where it's like, "Oh, that's the new doom and gloom." And hey, maybe this time they're going to be right and in two years I'm going to be out of a job because AI finally figured it all out. I will gladly update my resume at that point.

And until then, I'm going to keep doing everything I can to not only serve clients or advisors, but one of the things that we take really seriously as well, to that point, is that we're also trying to create a different experience for our team members. Part of it is just genuinely trying to care about people and their career development. Part of it honestly, it's super beneficial for recruiting to be able to say, "Okay, here's what we do the rest of the year, and here's how we minimize that ratio of preparer to the number of returns so that you can come in confident that I'm not going to make you work 80 hours a week to get a good deadline done." Because I think there are adjustments that can be made to get people excited for a profession that has a lot of value.

What's Surprised Steven The Most Building His Business [1:10:37]

Michael: So, as you now reflect on this journey over the past several years of building this direction, what has surprised you the most about building this... I was going to say tax service, but I don't even know how to describe it since you've got an active membership education layer that most traditional tax firms don't have. They "just do the tax preparation, the accounting." But what surprised you the most about building a business around this tax domain?

Steven: I think one of the things that still surprises me, and maybe it shouldn't anymore, is tax preparation feels like it should be a lot simpler than it is. And I hear that from people outside the industry all the time. And I feel that way inside the industry sometimes of like, "Hey, it can't be that hard to prepare a bunch of tax returns." But it still is because there's so many different pieces of data. You're working with so many different clients. There's so much negative emotion around taxes in general. A lot of people aren't motivated to do things around it. It's hard to find the talent. It's hard to keep up on all the tax law changes. Even just take the [One] Big Beautiful Bill [Act] this summer, I think if you printed out the tax file, it was like 900 pages long.

But for the tax prep world, that's not the end of it. Then the IRS has to translate it into tax code, and then it has to be put onto tax forms. And so, there's no stability to it. And so, if you take it at its core, it feels like tax prep shouldn't be that hard. It should just be math. It should be, you give me a couple of forms, I do a calculation and we're done. And the fact that that's not the way it works is still frustrating to me. And we're still working on how we continue to coach our clients and we coach our team and we work on those types of things to improve that process. But if somebody comes along with the idea that finally makes that simpler, I will be very, very grateful.

Another thing that's surprised me specifically about working with financial advisors, that's definitely one I did not anticipate, and one we've definitely had to adjust to from a communications and expectations standpoint. As I'm about to say this, looking backwards, it probably feels more obvious than it was going through it. But the advisors who stepped up first to be part of this are super proactive. They're super hands-on, they're super motivated. They're providing great service for their clients already, and they wanted to add collaborative tax preparation into that. And so, just the way our model works, we don't sell directly to taxpayers. We onboard advisors and they tell us who's a good fit, and great, that's who we sign up as long as they're a good fit. And so, these taxpayers are coming as direct referrals from their advisor who's providing this incredibly white glove experience for them.

And so, by extension, because we didn't directly address it, they assumed that this tax firm referred by this financial advisor would provide the same level of white glove service. And so, it just created some of these situations where compared to other tax preparers, we're providing phenomenal service and response time, but compared to their advisor, they're like, "Wait, why didn't I get a response in three hours?" And that's being a little bit extreme with it. That was another surprising thing where it's like, "Oh, we probably should have anticipated that." But of course, if they're coming to us directly from this advisor providing a white glove service, we can't just be better than the other tax offerings out there, we have to come alongside what they're getting from their advisor."

Michael: I guess, to me, again, it gets indirectly to the point that you made earlier that even being a higher touch, essentially lower tax return load because you've got 200 or 300 returns per lead per prepare, or not, 800 returns per lead, per preparer, some high volume firms out there. But you still might be trying to grind through 300 tax returns in three or four months. And a lot of us have 100 clients that we see in a year. And so, we still have fundamentally different capacity dynamics, which just has to impact how quickly you can respond, how personalized you can respond, how much time you can put into the relationship. Nothing negative to the service professionals, it's just literally a function of time and how much time is available divided across how many clients and how much work has to be done, that there's still a very fundamental mismatch between client loads and associated service capabilities that an accounting firm can do in tax season versus what an advisory firm may be accustomed to doing.

Steven: Yeah. During our tax filing season, we're getting 700-plus messages a week from clients that even if 10% of those messages are, "Thank you, I uploaded the document," somebody's still opening that, reading it, responding to it, doing something with it. And so, the sheer volume is just different than what advisors are used to experiencing.

The Low Point On Steven's Journey [1:15:40]

Michael: Interesting. So, what was the low point on this journey for you?

Steven: I love the optimism that the low point has already happened. I feel like the entrepreneurship journey...

Michael: "So good dot, dot, dot, so far... "

Steven: We've had a lot of great success and I'm super excited about that and there's lots of good things to come. But I think that's just the entrepreneur mindset at some point is there's always that part of you that's like, "Okay, but what's coming next?" The low point so far, really, I think comes down to some of those gaps between how we set expectations and then what was experienced, and having those moments of these things shift that we didn't have control over, but ultimately I'm responsible for as the leader, as the owner. And having to accept it. Mistakes are part of life. That doesn't make them fun. That doesn't make them something we should take casually, especially I would say in our second year, we grew significantly within the number of returns that we were doing because like I said before, the demand is there in spades, but we got the balance wrong of how many returns to add versus how many people we hired, and really the timing of hiring people.

Because we had staffed up to what we thought was an appropriate level, but we didn't have the lead time to really prove what team members were capable of at that point. And so, when we got into the thick of it and realized that we didn't actually have the resources we thought we had, then that's where it comes back on the owner and you're jumping in and putting out fires and trying to make things right.

Michael: So, you hired up nominally experienced people, and then found out when all the returns came in and the work had to be done, these people weren't as experienced or productive as expected, and now suddenly you had a gap?

Steven: It was a combination of having a skills gap as well as an expectations gap of...since we had scaled up quickly, that meant a lot of new client relationships. And we made too many assumptions about how that process would go and didn't identify quickly enough that it was going a lot more slowly than we'd originally realized. And so, it was a combination.

Michael: Like the time to onboard new clients and new advisors

Steven: And to get clients familiar with a new system and a new way of operating. And so, it was just definitely some painful growing that happened. But at the end of the day, my commitment is always, "Hey we're not going to claim perfection on the front end, but we are going to take responsibility for making it right."

Michael: I like that framing, "We can't claim perfection on the front end, but we can take responsibility to make it right."

Michael: So, what else do you know now you wish you could go back and tell you five years ago as you were starting down this path?

Steven: One of my jokes with my business partners is that the time machine's broken. And so, it's not it's not a question I spend a ton of time on. Honestly, Michael, if I could go back, I would probably just share with my former self some of the huge successes that I've seen along the way to reinforce that the work is worth it because being in the grind can feel like, "Hey, this is never going to get better." And so, hey, be being here recording this podcast with you, that would certainly go on my list of, hey, this does get better. This does have an impact. This is appreciated. We can deliver a lot of value. And so, there's certainly things that are going on here in 2025 that if I could go back five years, I'd say, "Hey, put in the work. Here's where we're going to be and here's why it's all going to be worth it."

Steven's Advice For Advisors Considering Building In-House Tax Prep Services [1:19:36]

Michael: So, any advice you would give to advisors who are thinking about building this out and doing it themselves in-house? "Hard to find preparers. You all don't have capacity, they've got client demand. We all agree that the demand is there." So, if someone does want to try bringing this in-house, what guidance or wisdom would you share with them as they start down that path?

Steven: The very first thing that comes to mind is you've got to talk to somebody who's been through it so that you can hear firsthand. It is never going to be the same as experiencing it yourself. And Michael, you've had several guests who've come on and talked about that. But I would absolutely find an advisor who's been through it. I can give my perspective, but it's still going to be the perspective of a CPA doing CPA work. Because as I talk to advisors who have been through that, there are definitely some unexpected challenges along the way, not the least of, which is just that simple acknowledgement that, "Hey, if this doesn't go the way you expect it to with the person you hire to do the work, it's on you." If you bring this in-house and then go back to your clients and say, "Sorry, somebody quit, we're not going to do your tax return," you're not just losing tax clients at that point, you're losing wealth clients as well.

And so, finding other people who have been through it so that you can talk with them firsthand. I've got a couple advisors I work with really closely that we do tax returns for them, but they are exploring bringing it in-house as well just because they do so many other things in-house, it's always been part of their roadmap. And they've started going down that route of trying to find someone to hire in-house. And it's just been a nightmare for them trying to find qualified candidates, trying to figure out how to pay them or what the quality control process is going to be, or even just the legal structure of do we separate entities? And what are they called? And how do we keep the compliance lines straight?

And so, I definitely know advisors who have tax prep in-house and it's usually a few years in. It's usually not the first year that they're super excited about it. But I definitely know advisors who've gotten a few years into it and are glad they have it mostly because of how much their clients talk about it. It is definitely a great prospecting tool. It's a great client retention tool. Clients love when it's all in one place, or they feel like it's all in one place. Even as we collaborate with advisors and clients know that we're a separate entity, we work closely enough that they still just comment often on how much they appreciate the collaboration because it takes another pain point out of their life.

Michael: Yeah. It's fascinating to me that I'll watch advisory firms that will say, "I've tried to find CPAs in the area. I can't find any who have capacity, so darn, I'm just going to build it in-house myself." And they proceed to spend, I don't know, a few hundred hours of creating the legal structures and the entities, and the hiring, and the pricing, and the marketing, and the communication, and all the other stuff, and all willing, it goes reasonably well. Sometimes it does, sometimes it doesn't. And I just look and I'm like, "Okay, I get you looked around a little for CPAs you could work with before you brought this in house, but you did like 300 hours of work last year to bring it in house after you talked to like three CPAs in the area that weren't willing to take anyone. Maybe spend 20 hours trying to talk to local CPAs before you spend a couple hundred hours trying to bring it in-house."

I will admit, I don't know, I think it's just the entrepreneurial optimism, particularly for those of us that have launched advisory businesses. It's like, "I can't find anyone to do it. Darn it, I'll do it myself." Look, that's how a lot of great entrepreneurial endeavors get built. So, I don't want totally fault that, but just as noted, the client loads really aren't the same. The work cadence isn't the same. For a lot of the folks that I know that have been through it, one of the things that I hear a lot is, "I didn't realize how evenly dispersed my work through the year really is until I tried to manage a tax practice and see what it's really like when…" I don't know whatever it is, "80 or 90% of the work happens in three and a half months." And not just how much harder that is to manage, but how challenging it is as an advisory firm to match together an extremely seasonal business with one that's much more evenly distributed through the year.

And the caveat, as you noted, the great thing about doing the tax work is clients dislike switching tax preparers almost as much as they dislike switching advisors. So, if you've got both touch points, the business gets super sticky. And the reverse is true, you can lose a lot of $10,000 wealth clients by having a problem on a $1,000 tax return.

Steven: Yeah.

Michael: And it cuts both ways. And I do just wonder a lot, even for all the clients that say, "I want a one stop shop," do you actually need to do the tax return or are they just saying they hate finding their own accountants? If you could just find the person for them, do you really have to do it yourself and go through all the trouble and challenge it takes to learn to do it well? I don't know, I pause on that sometimes to wonder.

Steven: And I think on that point specifically, we're proving that you don't have to do it in-house as long as you have a truly collaborative relationship. Because again, what we hear from the clients we work with is that they're trying to remove the pain, just like all of us. They don't want have to go get documents from their financial advisor to provide to their tax professional. So, the fact that advisors give us documents directly, clients love and talk about all the time. Anytime that I'm talking to a client and I'm mentioning something the advisor already told me about their situation, they're super grateful. They don't have to re-explain it or rehash something that already went on, I'm already familiar with what's happening, and that I can reinforce the great planning that already went on. And so, I don't think that it's that clients are looking for the same name on the pieces of paper, they're looking for that reduction in friction, that collaborative experience where they don't have a new source of pain every time they pick up the phone.

Michael: Right. No, I don't want the friction of finding someone. I don't want the friction of moving documents and information back and forth. I would love it if my advisor and tax preparer automagically have the conversations that make the things happen. And you can solve that under one roof, clearly, obviously, but maybe there's other ways to do it. And yes, it takes some searching to find because there's a shortage, capacity issues, but it also takes a whole lot of time to build. So, consider where you really, really want to spend your time solving problems for clients.

What Success Means To Steven [1:26:41]

Michael: So, as we just come to the end of the conversation here, and this is a podcast about success, and one of themes that always comes up is just that word success means different things to different people. Sometimes evolves for us as we go through growth stages in our own business and career. And so, you built this successful business serving advisors with tax returns and tax education, and only capacity constraints to add more people to do more of it. So, the business seems to be in a wonderful place now. How do you define success for yourself at this point?

Steven: For me personally, or how do I define it for my business?

Michael: For you personally?

Steven: It's a great question, one I struggle to answer in a succinct way, because for me, I've always looked at success as my ability to do the things I want to when I want them, which might get summed up as flexibility, that might sound like, hey, I just want to go play all the time. But early in my career, I measured it even as, "Hey, my wife just called and my son fell down the stairs and hit his head on a shovel. Can I drop everything right now and go take care of that when I need to?" Now, that was a real situation. And I was at a big firm, and at the time, it was almost a little bit of a question mark of, "Hey, could I go take care of that?"

Thankfully, as my kids have gotten a little bit older and my career has gotten more developed, now a lot of fun things get included in that as well. But whether it's in my personal life or in my business life, a big piece of success to me is helping people take action. So, whether it's being able to go and do things with my family, help my family, have adventures with my family, or as I'm working with advisors, as I'm working with taxpayers, maybe it's because I'm a fitness buff and doing different races and events like that, but action being able to take action, being clear on what that action provides has always been an indication of, "Okay, I'm doing something important here."

Michael: Very cool. I guess that's the thing. Take action and have flexibility about the actions that you get to take, or have to take, or have the room to take, becomes like the common theme, the common thread for you?

Steven: Yeah, it really does.

Michael: Well, very cool. Very cool. Well, thank you so much, Steven, for joining us on the "Financial Advisor Success" Podcast.

Steven: Michael, it's been a pleasure. I appreciate so much all the things you do for the industry. I've enjoyed all of the chances we've had to meet and interact together, and really appreciate being able to come on.

Michael: Likewise. Thank you.