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By Holly SwanExecutive Director, Advisor Institute

With tax season in full swing, offer to review prospective clients' tax returns. Understanding their full tax pictures might open the door to a discussion on how tax-smart investing could help improve tax outcomes next year. Imagine the conversations that could arise by asking questions such as:

  • "Were your tax outcomes this year better or worse than you expected them to be?" Many prospects regularly see their pretax returns but may not understand their after-tax returns. For these prospects, tax time can be eye-opening. Offer to provide prospective clients who owed more than expected at tax time with information and ideas to create a better tax experience next year.

  • "How do you foresee your tax situation changing in the coming years?" Many life events—the sale of a business, a job change, moving to a new state, retirement, marriage, divorce or the birth of a child—can impact taxes. If a large liquidity event is anticipated, consider implementing a capital-loss harvesting program, charitable giving strategy or both to help offset the tax burden. Those expecting their income to increase dramatically may want to rethink their asset allocation and location given the potential for a higher tax bracket and surtaxes. If relocating to a new state, it's important to understand possible state and local tax implications and if asset allocation changes should be considered.

  • "How have taxes impacted your ability to achieve your financial goals?" Taxes decrease earnings and, as a result, may necessitate adjustment to financial plans and timelines. By identifying your prospects' goals and how taxes have impacted them you may be able to suggest tax-aware portfolio adjustments their current advisors haven't considered.

Bottom line: The After-Tax Advisor® can attract new clients during tax season by helping them think ahead to prepare their investment portfolios for optimal tax outcomes.