Welcome to the Retirement Tax Services Podcast! Steven’s guests today are Phillip Christenson and Jim Sexton of Phillip James Financial. Together, Phillip, a CFA; and James, a CPA comprise an independent practice. They provide both wealth management and tax preparation services.
That kind of professional advisor-accountant partnership isn’t run-of-the-mill. However, the mind-boggling part is how they got their practice where it is today: At one point, they made a conscious decision to let go of 50% of their clients.
Phillip James Financial began with Phillip Christenson’s and James Sexton’s friendship in high school. Mutually interested in financial markets and investing, the two traded stock tips.
In time, Phillip became a CFA. Meanwhile, James became a CPA, so they decided to start an accounting firm. There was just one problem.
They didn’t like accounting. The more they did it, the more apparent that became.
Meanwhile, wealth management had more and more appeal. It seemed like a natural transition to make. Since they were already doing clients’ taxes, the bridge was practically waiting for them.
They kept the tax side of their business, but transitioned all of their accounting clients off. In other words, they took a calculated risk, cutting 50% of the names from their CRM.
When the dust settled, they had a wealth management firm that specializes in tax planning and preparation. Converting tax prep clients into the wealth management side of the practice proved easy. The trust was already there. As a result, many of them were already receptive to the idea.
They still took off-the-street wealth management clients, but more than a few came from their existing roster. Today, they mostly welcome prospects seeking both areas of service.
Before the switch, they often had to stop at base-level compliance with tax clients. Today however, they can give specific recommendations and advice for going forward.
For example, if a retired tax planning client could benefit from Roth conversions, they’ll look at their projected year. Next, they’ll do a tax projection in the fall. Finally, they’ll walk them through the projection in terms of current year tax liability and potential benefits.
Although they haven’t written off expansion in the future, they’ve kept the operation small. This means Jim and Phil currently are the ones doing everything tax-related.
It also means increased familiarity with clients. If someone mentions a client’s name, Jim or Phillip probably knows their income, birthday, et cetera, by memory. If not, they can pull that information up quickly.
Steven often recommends getting every client or prospect’s tax return annually. However, in Jim and Phillip’s case, that base is already well covered.
If you can show a client that paying extra taxes now caps what they’ll pay over the next 30 years, they’re usually receptive. Quantify the value to them.
Be on the lookout for opportunities to combine strategies, as well: Sometimes if a client is charitably-inclined, you can pre-fund charitable goals during years of converting. This drives income down through those deductions. Front loading the gifting can drop income while the conversion is increasing it.
Steven, Phillip, and James have much more in this edition of the Retirement Tax Services Podcast. You can reach Steven at advisors@rts.tax.
Thank you for listening.
Steven Jarvis:
Hello everyone and welcome to the next episode of the retirement tax services podcast, financial professionals edition. I’m your host, Steven Jarvis CPA, and in this show, I teach financial advisors how to deliver massive value to their clients through retirement tax planning. With me on the show today, I have Phillip Christenson and Jim Sexton of Phillip James Financial. They’re an independent wealth management firm based in Plymouth, Minnesota, that doesn’t just focus on tax planning, but also does tax preparation for their clients. So I’m really excited to have them on the show today. So Phillip and Jim, welcome. It’s great to have you, before we dive into some really specific tax topics, I would love to hear a little bit about how you guys ended up with this model that you have, where you’re doing both wealth management and tax preparation? We all know that tax is an important part of planning, but it’s not very often I see advisors who are willing to really embrace both.
Phillip Christenson:
Yeah, So we probably started our firm about 10 years ago, roughly. And we actually started as just an accounting and tax company since Jim and I, we both have accounting backgrounds. So I have a degree in accounting, Jim is a CPA. Uh, I am a CFA. So since we both had the accounting background, we thought, well, let’s start an accounting firm. What we realized after a few years is we don’t really like doing accounting. [laughs] But we always had a history with the financial market- investing. So like back in high school, we had trade stock picks all that kind of fun stuff. So we kind of transitioned and said, Hey, I think we would like this better. If we provided wealth management. We already knew how to do it, and the taxes worked so well with that. And we found that clients really wanted that, that bridge between the taxes and the wealth management that we kept the taxes. And over the next few years we transitioned all of our accounting clients off. So what we’re left with, it was a wealth management firm that specialized in tax preparation and tax planning.
James Sexton:
And then it kind of gave us an opening when you prepare somebody’s tax return, there’s a level of trust that is built. And it was a natural progression for a lot of those clients that we were already preparing tax returns for to have that discussion on financial planning and investments. And you start pointing out, you know, here’s some things to consider and it just naturally moves into that financial advising relationship on top of it. Yeah. Our first clients were obviously from our tax planning days.
SJ:
Did you see that trend continue that it was easier to start that relationship on the tax side? Or is that really just as you converted over that, that’s where you’re pulling your clients from?
PC:
More On the conversion point. I mean, we still had a lot of people coming in for financial planning when we kind of made that service known. And so that, that didn’t stop obviously. But the tax piece of it that was definitely built, we had a lot of initial growth that was built from converting people that were in taxes and what we found is it’s a lot easier to add new tax clients because they have to get their taxes done. Right? So when you have a wealth management client, yeah they need it, but there’s nothing to force them to make that choice. Right? But they have to get the taxes done. So they say, yeah, that’s fine. Do your taxes. Once we have their taxes, we can look at them critically and give them real tax advice along with the tax preparation. And it naturally leads into the wealth management discretion. So while we get clients from both the wealth management and the tax preparation, it’s easier to add a tax preparation client and then convert them to a wealth management client that is to start fresh on the investments.
SJ:
Yeah. There, there definitely isn’t really an equivalent to the IRS on the saving for retirement side of the house.
PC:
Exactly. Maybe there should be, but yeah.
SJ:
Yeah, we don’t, we don’t have time on today’s podcast to cover that one. So as you described that, as you made that conversion initially was, was there thought that maybe you would just leave tax behind initially cause that wasn’t really what you were excited about or did you always know that that would have to stay in and take real part?
PC:
Yeah, it was a conversation. We knew that taxes were such a big part of the overall financial picture of a client. And it was definitely areas that we, you can see and anyone that prepares taxes or does heavy planning in it knows that you can truly attach dollars to activities that you’re doing on the tax side. Right. Here’s, you know, if we do, if we convert this amount or we do this, you know, we’re going to get this deduction, it’s going to save you X amount of dollars in taxes. So it’s easier to show that value. But going back to your, more of your question on the conversion port or, you know, is it easier to yeah. So when we converted, when we kind of moved over- taxes are a lot of work right? So when we first did it, we were still taking on every single tax client. And what we decided is what we really have to kind of niche it out. So now we really do taxes. We’re really specializing in who we take on from a tax planning perspective.
JS:
Correct.
PC:
So they need to be kind of open to that wealth management type of device. So if someone’s just looking to get their taxes filed, they’re not asking the right type of questions. It’s really just a transactional thing. We know a lot of other tax preparers in the area that we will refer them to. But if they’re asking questions, real tax planning questions, that’s when we’ll have that conversation with them and say, yeah, this might be a good fit. We’ll prepare your taxes. You don’t have to be a wealth management client, but we’ll prepare those taxes for you because you’re already asking questions about conversions and what bracket you’re in and all these different, different types of tax questions that will lead into potentially you being a wealth management client.
JS:
We did transition off a lot of tax clients. So in that, in that initial kind of adjustment that we made years ago, just because anyone that prefers taxes understands the capacity constraints that it takes to prepare hundreds of returns in a given three months span timeframe. So, so we did, we did transition out probably close to 50% of the tax book, you know, over the course of a year or two. And then we just hunker down and got really specific on the test allies that we wanted to bring on. Really intentional about that.
SJ:
Good for you guys. Congratulations. I mean, I’ll have to do that. I know I talked to advisors who are making this conversion from, from tax to wealth management, but as they look at their client list and as it’s grown over time, they inevitably end up with clients on one end that you know, used to fit their model, but don’t really anymore. And they’re really hesitant to let those clients go to make room for the clients they really want to. So for you to let go of 50% of your clients in a year or two to really commit to where you saw the value. That’s impressive.
JS:
Yeah. That was, it was tough. It wasn’t easy. Yeah. That’s for sure. We had a lot of discussions about, no, we can’t let them go because of tax. They’re my sister’s friends. Yeah. I’d say or whatever. There’s always a reason there is you have to look at it and say, well, that client doesn’t fit us. So we’re really, we’re, we’re almost doing them a favor to keep them on, but that’s not why you run a business. You’re not doing favors for your friends, right? If you want to do some taxes on the side or something saying, yeah, if you need help, I’ll help you out. Whatever. That’s fine. But make that separate.
PC:
And we knew if it kept on growing at the rate that it was, and we didn’t make a change, we were going to run into a big issue and we were running right into issues. We don’t want to be working seven days a week, 10 hour days. That’s just not, you know, that, wasn’t what we wanted.
SJ:
Well, you guys are definitely the new gold standard I’m going to refer to when advisors don’t want to let go of 5% of their clients to make room for a better 5%. Okay. Well, you need to talk to Phillip and Jim about when they got rid of 50% of their class.
PC:
It takes time to get that wrapped around your head. But yeah, it’s, uh, it’s worth it in the end,
SJ:
Even just watching your reactions as you talk about that, I can tell that there was some very strong feelings when it was happening. So I’m glad it’s all worked out though that focus on where you can deliver the most value both to your clients and what makes the most sense for what you want to accomplish personally. So important. So maybe talk a little bit more about not, not just the wealth management piece, but from, from comments you made, as we were talking before the show, I know that even within wealth management, like you have a focus of who you’re looking for as clients, who did you land on as, as your target client and how did that process kind of work for you?
PC:
Yeah. We kind of landed on the type of client that we work best with are basically pre-retirees and retirees. Plays in well to the tax, the heavier tax plan that we like to do. Um, just because generally speaking, they have a lot going on from a tax perspective during that period, during that period of time. Right, right? Before retirement and then throughout retirement. Income’s changing, you know, either dropping from the wave’s perspective. And now you’re getting different streams of income, pensions, social security portfolio income. And now it’s trying to figure out how do I use this money and turn it into an income stream for life. Right. So it does create a lot of opportunities. So that’s kind of where we ended up on the pre-retiree or retiree route. It just fit well with our overall planning process, what we enjoyed doing and what we felt like we could give a lot of value in to also, you know, justify the cost. Right.
SJ:
Yeah. Now, so you talked before about now, as you still do the tax preparation, one of the, one of the places you see a lot of value is that you get to the end of it and then you can come out of it with specific recommendations and advice for going forward, not just checking the box on compliance. How have you set yourselves up to be able to do that effectively? I guess what’s your system, or is there a software you use, uh, as you’re looking at a tax return to know, okay, what are the next steps or what opportunities am I looking for?
PC:
Yeah. We use Microsoft Excel.
SJ:
As any true accountant would thank you. Thank you for making sure. I’m not the only one who loves Excel that much.
PC:
Yeah. That, and then we have a tax offer. Drake says our tax preparation software where you can also do tax planning in it. Yeah. And we know we recognize it by a lot more, better softwares out there potentially, but we don’t do a ton of returns. I mean, because by design, we’re just not going to, you know, we’re limiting the amount of parcels that we’re going to manage, so we can devote that time to those households. It’s, you’re starting from scratch. Drake is kind of known as a budget tax software, but we started with it. So all our data is in there, the works we know how to use it. It’s fine for what we’re using it for. If you’re going to start something, you could definitely look at that software, but there are others out there. Right. And going beyond the software piece, just talking about the systems that we do for how some of these tax planning pieces that we do.
PC:
So just talking about Roth conversions, right. What we like to do is, you know, if a client’s, you know, in retirement maybe, and their income trap, you know, in that year, we’re looking at Roth conversions and we’ll probably do a tax projection in the fall, right. Get year to date figures. Well already kind of looked at if the client is, is, is not eligible, but you’re always eligible. It makes sense. It makes sense just from a high-level perspective. And then we’re going to do the tax projection. We’re gonna, you know, walk them through what that looks like, tell them what the liability would be, you know, and then we’ll, you know, we can get into the specific specifics of that Roth conversion planning. Um, but that’s kind of the general process.
SJ:
How many other people do you have on your team that are helping with this? Is this the two of you looking at these tax returns and going through and identifying these opportunities, or does someone on your team help with part of it? You are the one delivering it to the client. What’s that dynamic look like?
JS:
We are the tax preparers and we do all the tax analysis. So we look at every return and not at least for now, I think it would be very hard to pass that off, but all of the administrative work that’s done through an employee. So all the printing, the putting the packets together, the mailings, basically everything else that goes along with it, someone else is handling.
PC:
Yeah. But for the most part, when we get to the tax piece of it, it’s all us. And we’re a small operation. That’s also, I mean, yeah. Whereas for a small firm, eventually it’d be great to have another CPA, you know, preparing all of, you know, all the returns right. And handling that. But right now it’s still an I that are doing it. But that also gives us a really good look at the client really helps us get to know the client really well, especially from a tax perspective. Right. I mean, someone mentioned one of our client’s names. I kind of know what they make in my head. I kinda know a lot about them. Not just like what their family is and all that kind of stuff, but I kind of know their taxes. And if I don’t, I can pull it up really quickly too.
SJ:
Yep. Yeah. One of the recommendations we’re constantly making to advisors is to make sure that they get every tax return for every client every single year. And I’m sure that’s something I don’t really need to push you guys on. If you have them that’s that makes that step of the process a lot easier for sure.
PC:
Yeah, it does. Um, it’s extremely efficient, especially if you need like, oh, what was their kid’s birthday? Oh, well tell him the texture. What was, uh, what was their income this year versus that, uh, you know, five years ago, it’s easy. We can pull all that data. It’s just, taxes are such a great informational tool to have. And it’s right there. You don’t have to go and ask for it. You don’t have to ask the client, then they get back to you in two months. Right. So just having it makes us that much more efficient in our plan. Yeah.
SJ:
I completely agree. I constantly preach the value of, of what you can learn from a tax return. It goes so far beyond just, uh, what was their taxable income or their tax bill last year? Uh, if, if you know what to look for. So you mentioned Roth conversions. What are, what are other things that maybe are kind of just at the top of your list of, of we know anybody on the lookout for these opportunities, for the types of clients that we serve
JS:
And we can dive into Roth even more. I mean, for, I mean, do you want to talk more about the, um, some of the benefits that we kind of lay it out there for clients?
SJ:
Yeah. Yeah. If you, if you want to talk about how you explain it, because that’s one of the tricks I think with some of these opportunities we talk about is as advisors or as CPAs, we talk about these things all the time and they can, it can kind of start to feel like, oh, well, everyone knows what a Roth conversion is, but that’s just not remotely true. And so it’s okay. So yeah, if you can share how you explain this to your clients in a way that they’re excited about and get on board with and not just, oh, I better, I better trust Jim and Phillip again, but that they really understand what it is you’re doing for them.
PC:
Yeah. I mean, we lay it out there for when we, when we start having the conversation on it, we start with, we’re looking at a strategic withdrawal strategy at the end of the day, right. The sole purpose of that is to limit the tax drag on your portfolio or the life of your plan. Okay. Roth conversions are a piece of that. There’s a lot of other elements that could be done, but specific to Roth’s, right, you’re gonna, the goal is let’s utilize your lower tax brackets in any given year and your income jumps and goes up and down depending on what’s going on in life. But generally when you retire, your income is probably going to go down your, your, yeah. Your wages, you know, you’re probably dropping in income at that point. Right. And if, if you can, you’re delaying social security RMDs don’t kick into 72, right?
JS:
So your income is going to go down, but that’s a perfect opportunity to possibly convert where likely the majority of your savings, which is tax deferred, 401k IRA. Yep.
PC:
And now at this point you have some control, right? Because once RMDS go in full swing, social security hits, if you can’t delay pension or whatever, you lose control over that, of that, you know, piece of your income. Right. So there’s a window typically with many retirees where we can start to increase income through Roth conversions. Right. And utilize those lower brackets that you wouldn’t be using in that, in that year. Right. And then, you know, going back to, again, the tax side related to Roth conversions, it’s not just utilizing more brackets, you’re enhancing asset location. Right. So on the portfolio side, which I know Phil, you can speak to. Yeah. Yeah. So you do a conversion, we’ll know it’s a Roth right. So what are you going to invest in a Roth? Well, it’s going to be different from a tax deferred account. It’s going to be different from a taxable account. A Roth is tax-free. So maybe put your small caps in there or something, um, tax deferred, you’re gonna have your bonds, all that kind of stuff. So not only are you improving your overall tax situation, you’re building your investment situation too, because you’re improving your asset location. Right? And then you also get additional tax liquidity. So most retirees have most of their wealth in taxes per account. When you retire, you know, I got that income, you leave out the portfolio and let’s say, you need a roof repair or whatever. Well, if you pull it all from tax deferred, you may push yourself up into a higher tax bracket. Yup. Right. Yeah.
JS:
But you’ve done conversions earlier. Okay. Now you have some tax-free assets. Well, you can pull that and not have an impact on your tax situation for that year. Right. So, so that’s another reason why to do more conversions and on the legacy side, the inheritance piece of it, obviously your heir would rather have tax-free Roth assets, right. Versus pre-tax. And especially with the cares act, uh, eliminating the stretch. It’s definitely made that strategy probably more beneficial because your heirs are likely going to inherit this, assuming it all works out and you’ll, they’ll inherit it in their higher income. Right. And so right there, they’re going to be adult children. They have their own jobs, their own life. And if they got a tax deferred asset, they have to take RMDs, they’re taking it at their highest marginal bracket that will probably ever be potentially even higher. Right. Because it could be stacking on top of, you know, marginal rate that they wouldn’t otherwise be exposed to. And yeah. And now it’s just tax-free rock. Right.
PC:
So the whole point of a conversion is just to get the money out at a cheaper tax clip. Right. A lower marginal bracket. That’s like, that’s step one. But there’s all these other things that kind of go into that decision to say, do we want to do it? And how much do we want to do it? And in what year do we want to do it? Yeah. Right. So, it’s a bigger discussion than just a, yeah. You’re in a low tax bracket. Let’s do some converting
JS:
And, or just being mindful of conversions in general. I mean, everyone thinks conversions are great, but that’s not always the case for everyone. Right. It’s not always beneficial to convert.
PC:
Right. So, so, so the way to do it, what Jim was saying earlier is first you meet the client, you identify the need and say, yeah, there’s potential here. And then you look at their taxes when the situation, as it will say, okay. Yeah. I could see this might make some sense. And then you wait until like the fall, sometime around there and you do their taxes ahead of time. You don’t file anything, but you look at their tax situations. Like if we filed the date, here’s what it would look like. And that’s going to give you that answer and say, oh yeah, we got $20,000 left in this tax bracket and, or the next few years, here’s what I see. So let’s do that conversion. And then you saw a time before you end the yearr to do it. Exactly. So that’s kind of how that process was.
SJ:
So I really like how you phrase that if we filed today, uh, so that you really put it in, in terms that is really, I mean, anyone’s going to latch onto, cause we all, we all know that pain of having to write a check to the IRS or not getting as much of a refund as we thought we would. You guys know if you asked most of your clients, how much they paid in taxes last year, they probably couldn’t tell you, but they could probably tell you if they got a refund or made a payment. And so I liked that if we filed today,
PC:
The things to watch out for when it comes to the Roth covers, right? So we’ve talked about margin rates, but we all, there’s other taxes and other surcharges that, that play in and that are related to your income, right? So net investment, income tax net, you know, if you’re pushing your income, come up, you could be potentially pushing more portfolio income, um, you know, right. Or IRMA, you know, the Medicare surcharge. So again, you got to think of, it’s not just the marginal rates. You also have to take it. It’s a whole picture, all of these other taxes that are taxes. Exactly. I saw AMT the 0.9% charge. And then also capital gains. Yeah. Well it could go from 15 to 20% if you push your income up. So you got to watch that or you can go, you could be going from zero to 15. : That’s right. And a lot of people have state taxes. Well, what’s the state marginal bracket. So you’ve got to watch all these things and just, just look and be aware of it. And that’s going to help you make that decision. And when you can explain it to a client in that level of detail. They trust you to do it. Even if they don’t know everything that goes into it, you’ve looked at it. You know, it, you can speak to it that they are going to say, “Yeah. If that’s what you think is right. And then go ahead and do it.”
SJ:
Um, let’s come back to the shadow taxes. I like that term now, is that because you guys are exactly right. There’s a lot of those to take into consideration. It’s not just what tax bracket I am in. So is that, uh, so do you guys keep track of that through doing that draft tax return through your Drake software? Or is that your magic excel spreadsheet?
JS:
Yeah. No, that, that is a tax projection. We do, but yeah, that’s, that’s kind of where we come into, you know, running the scenario and say, okay, now we’re getting an exposed to net. Here’s the additional tax associated with that. Right. And then you’re also going to potentially have a higher Medicare premium a couple of years later, right after this because of that. But again, we’re already having that conversation. And a lot of the times clients aren’t even aware of that, right? Again, by laying it all out there, you know, you’re, you’re the expert in it. And it does build just a tremendous amount of trust. When you can explain to her that, you know, no one wants to pay that bill, but when you tell me here’s what it is, here’s why, and we may go into a higher Medicare premium because it makes sense to, you know, down the road, you know, to pay a little bit more, you know, two years from now, but then eventually we’ll be back down because hopefully in the future, we won’t get exposed to a higher one. So if you lay it all out there, um, I just, I think clients just love it.
PC:
I mean, at the end that they’re okay paying extra taxes now, because if you can show them, Hey, you know what, if we push enough into your tax-free asset area here, then we’re going to cap your taxes for the next 30 years, because you’re going to draw a tax deferred, but we have enough tax-free over here. Exactly. So when you hit the 15% bracket, it’s going to all be tax free or after tax 15% capital gains. If you just cap the client at 15% for the rest of their life, they’re pretty happy about that.
SJ:
It’s really amazing what you can do with taxes. If you’re taking that long-term approach, you guys are talking about, because if someone comes to you in, in March for their taxes for the prior year and says, Hey, save me a bunch of money. You’re not really left with a lot of options for that year, but if you’re looking at 5, 10, 15 years, their lifetime, we can start having an impact. Yup,
PC:
Absolutely. Yeah.
JS:
That’s when those dollars add up to big numbers and you can justify a big fee too, if that’s what you charge. Yep.
SJ:
Yeah. The you’re quantifying that value to the clients because really whatever service you’re talking about, but fee structure always come up in advising. But the piece that gets missed in that discussion too often is not, Hey, how did I decide what the calculation for my fee is, but how did I provide value to the client? And how did I make sure the client knows how much value I’m providing to them?
PC:
Another thing to consider it, a Rothversion. We can wrap this up. I mean, we could talk Roth all day long, but another thing that we like to look at for clients, so those that are charitably inclined is pre-funding charitable goals during those years of converting, right? Because we’re increasing income, but if we’re increasing the charitable deduction or the charitable donations, we’re also driving income down through that production. So we look at utilizing a lot of donor advised funds for clients during these years, donate appreciated stock versus cash. So a lot of there’s a lot of, you know, you don’t forget the charitable piece in conjunction with conversions, because for those that are gifting a certain amount every year, if you have, you can kind of walk through the math and say, Hey, let’s maybe front load five to 10 years of gifting during these five years of conversion, we can drive income down while we’re increasing that through that conversion too.
SJ:
Yeah. There’s no limits on the number of strategies you can work on with a client. We’ve got to make sure that we’re not confusing complexity with value, but when you can combine these things, you can really accelerate that benefit to the client. That’s a great point. So I like to make sure that I’m always giving listeners really clear action items, that they can take the information from this podcast and do something about it. So whether you’re thinking about that, your next round of client meetings or things that you learned early on, as you embrace more of this, what are actions that you can recommend to advisors listening to this, to be able to up their game when it comes to tax planning?
PC:
I mean, it depends on where they’re at. Are they already doing any tax planning or trying to do taxes? Either the tax preparation, I guess I wouldn’t jump right in and say, yeah, I can prepare your tax return. Just start taking the client’s tax attorney, re viewing it, look at it for one just that given year and say, Hey, could they maximize their 401k? Did they maximize their H606? Right. It’s just like simple things. And then start looking at some more complex things like, Hey, what bracket are they in? And what does that mean going forward? Right. And then you can kind of start to apply it to their other items. Like what is their portfolio investment? How does that relate to their taxes? So it’s all these just don’t jump right in and do it just take incremental pieces. And if you want to look at conversions, go ahead.
JS:
You can certainly start there, but just go slowly and say on its surface, don’t look at all, everything we talked about, just say, what is your tax bracket now? What is it going to be in the future? Where do I think it’s going to be? And that’s where you start and say, yeah, I think conversions might start to make sense. Don’t get too complicated. You can buy all sorts of softwares and all, you know, all the different things and some are great, but I would just start there.
PC:
Right. And that’s, and that’s specific to rock conversions, but as far as just getting general knowledge on the tax side, right. So looking at returns, getting a copy of the return, I think that’s key. Starting to understand that- I mean, there’s educating and, and getting the knowledge. So I’m sure there’s, there’s always webinars, there’s always, you know, courses that you can take around individual taxes. I mean, most states have a CPA society, you know, Minnesota CPA society is what I’m a part of. But I think a lot of states have that and you can be a non CPA member and get, you know, pay for a course just to get exposed, get the knowledge and just start building that, that knowledge it’ll get you more comfortable talking about it with clients. And then you can kind of dive in deeper, like these specific strategies. Yeah. And if you do want to get into tax preparation, don’t I wouldn’t just offer all your clients right away. Take a handful of family and friends. First. I leave friends a lot. They’re generally more forgiving.
JS:
Yeah, yeah, yeah. Just start there. And then you can slowly add five or 10 clients a year. You’ll kind of gauge, Hey, how hard is this?
PC:
And don’t be afraid to say no, if it’s, if it’s getting into a situation that you’re uncomfortable with, I think that that’s key. I mean, you do what you’re comfortable with and specialize in that. And that’s how we are. We don’t even offer business, uh, taxes. Um, just because I think it’s another, it’s so specific and there’s so many nuances that, you know, it’s different than individual taxes. And so any client that needs business tax advice, you know, when it gets a little bit more deeper, we just refer it out. We’ve got a great CPA that handles that. And I think that’s key too. So know your law, uh, be comfortable with the knowledge that we have and if you’re feeling, if you’re not equipped to it, you know, reach out to another professional that’s specialized.
SJ:
Well, guys, I really appreciate that. There’s some great advice in there just to kind of recap that a little bit, the action items out of that are make sure you start simple. The key part in that being starting, you have to start somewhere, you can’t just dive right into the level of my guests that have spent their background in accounting, but you got to start somewhere, start simple and then build on it, make sure you’re getting those repetitions that you’re gaining that knowledge both through some of the great resources that are available in the industry and just getting those repetitions, reviewing actual client tax returns. You’re going to learn a lot, especially on those clients that you already have some context and background with and then looking at their tax return and seeing how that fits in. And then I, I want to key in on that other piece that you said of not being afraid to say no to, to know where you feel comfortable. Cause that’s really going to get back to making sure the client is getting that value, the client is being well-served, of not biting off more than you can chew or whatever analogy we want to use. I’ll throw in on top of that, that personally, I’m a fan of what we have out of retirement tech services.com as far as resources for advisors who want to learn more about taxes, but there are certainly lots of great resources out there and whichever one works for you just embrace it and make sure you’re using it. So thanks a lot guys for being here today. I really appreciate it. Really appreciate everybody listening in good luck out there until next time. And remember to tip your server, not the IRS.
