Mind the Gap: Clients Want More Tax Planning Than Advisors Offer

When the taxman cometh, clients have a high bar for their advisors. 

But while 60% of advisors say that clients expect tax management and planning, only 26% of them prioritize it for high-net-worth clients, according to a recent survey from AssetMark. That gap highlights a challenging opportunity: Delivering more sophisticated advice requires time, specialized expertise and the right infrastructure, said David McNatt, AssetMark’s chief wealth solutions and strategy officer. A strong tech stack, though, can help.

“Tax management solutions can now monitor portfolios daily for tax-loss harvesting opportunities, support tax-aware rebalancing and help manage portfolio transitions,” McNatt said. “These are capabilities that would be difficult for many advisors to deliver consistently at scale on their own.” 

A Little Help From AI 

Generally, financial planners’ hands are tied when it comes to actually preparing taxes and even offering insights into the often complicated tax code. But they can offer guidance for tax-efficient investing and, as they often do, connect clients with CPAs. Increasingly, McNatt said his firm is seeing technology make it practical for advisors to deliver the broader range of services that high-net-worth clients expect: 

• Artificial intelligence, for example, can help cut down on administrative work, unify data and optimize the analysis of trade-offs, which helps advisors prepare for more meaningful client conversations, he said. 
• The opportunity for advisors isn’t just to offer more services, but to deliver a more complete “advice experience,” with tax awareness integrated throughout the year instead of just as Dec. 31 approaches, McNatt added. “Technology makes that easier to scale, while the advisor remains at the center of the client relationship.” 

The bots should just be helping advisors work efficiently without breaking the bank. Tech has made much of the easy work regarding tax planning cheaper for advisors, said Matthew Chancey, founder of Tax Alpha Companies. But while his firm uses AI to prepare, he added that it’s never used to actually make decisions. 

Calling In More Experts. But Alex Caswell, founder of Wealth Script Advisors, said he’s hearing from clients that they want tax preparation — and that’s a whole other ballgame. “This is where hiring the right staff members, coordinating with the right outside vendors and then plugging in the tools may be the solution that advisors are looking for.”