I'm a financial advisor. Ninety percent of my revenue comes from investment management. The other ten percent is split between financial planning fees and tax return preparation. For the last six weeks, I've been working day and night. Is it really worth it to prepare tax returns?
This Website Is For Financial Professionals Only
Tax returns are merely records of the past. There's very little that can be done to save clients money at that point. So, tax return preparation is essentially a commodity from the clients' point of view. It doesn't matter to a client whether it takes one hour or five hours to complete a return. It also doesn't matter if you are charging hourly or project billing, tax preparation is never going to be a big money maker.
So, why do it? Why spend so much time and energy on endless tax returns? It's not a profit center, especially when you consider the cost of a CPA salary, an intern, secretarial time and tax software. At this time of year, I question my decision. For the rest of the year, I know why I do it: It's what the clients want.
By offering tax preparation services along with investment management and financial planning, clients enjoy the benefits of:
- Coordinated tax planning
- Direct investment tax data for tax preparation
- A "one-stop" shop
Many advisors believe preparing tax returns would decrease referrals from CPAs. That has not been my experience. For those clients with a trusted CPA, I gladly cooperate. I also assure their CPAs that my goal is not to prepare more tax returns. This actually works, as evidenced by the many clients who come my way via their CPAs.
This time next month, I'll be fully convinced that my decision to prepare tax returns is the way to go. Today, I still question my resolve.