Advisors: Did Your Client’s Accountant Ask About You?

The job of an accountant can sometimes be thankless. They tell clients how much they owe in taxes, when everyone wants to get money back! They tell them their estimated tax payments will be bigger next year. They might tell clients their attitude concerning business expenses might be too aggressive. Clients might be unhappy. Where investing is concerned, they might have questions about their client’s relationship with you, their financial advisor.

Let us assume the client’s accountant is primarily focused on tax return preparation. They are not offering financial planning or investment advice at this time. Here are six conversations they might have concerning investments:

1. Are you doing any financial planning? Some people run their finances out of their pants pockets. They keep spending until they run out of money, then they keep spending on their credit cards or Home Equity Line of Credit. (HELOC) They spend as if the good times will last forever. They owe lots of money and are unaware how much it is costing them in interest payments. Non business credit card interest is not a deductible expense.

Client: Ideally, they explain you have brought up financial planning previously. Although they have not given it much attention, they promise to address it in the future. They mention this conversation to you or you initiate the conversation asking, “What advice did your accountant give you when they prepared your tax return this year?”

2. Are you taking full advantage of your opportunities to save for retirement? The client likely has a retirement plan at work. Are they contributing enough to get the full employer match? If not, your client could set up an IRA account. Have they done so? Are they contributing the maximum amount or as much as they can afford? There are rules concerning maximum deductibility if the client is already covered by a retirement plan at work. (1) Have they done retirement planning analysis with their advisor? If they have a “side hustle” on eBay or consulting, are they able to set up a retirement account funded through that source of income?

Client: You hope they will say you have run different retirement planning scenarios. The accountant will know if IRA accounts have been set up. They will likely say you have brought it up several times. Maybe this is the year they follow your advice, reducing their taxable income.

3. Are you keeping track of your short- and long-term losses and gains from stock trading? This conversation might be directed to your client who works with you but also trades online, probably without your ongoing knowledge. They are a day trader in the world of “no commission” online trading. Their accountant has told them their short term trading has landed them with a significant additional tax bill.

Client: They have mentioned before they have “play money,” their description of their online trading accounts. Maybe they have been decretive about their other brokerage and bank accounts, telling you it’s on a “need to know” basis. You cannot help them to the extent you would like because you don’t see the full picture. You might have a conversation with them about consolidating their other accounts with your firm.

4. Do you know how much money you are paying your financial advisor? Why do financial advisors wake up screaming? This could be one of those reasons! Some advisors might use a version of “Don’t ask, don’t tell” which would be “Don’t tell if they don’t ask.” This might be a client who does not pay much attention to their statements, but gathers them together and hands them over to their accountant at tax time. If their accountant surprises them with a large number in fees paid, this could result in an angry call from the client to you.

Client: You want to have this conversation periodically. Where are you charging fees and where are you not? What assets held away are you also advising on? How much money have they made last year? What did it cost? This might be periodic conversations about “How we make money” when they add a new investment. If the client has learned “How we make money” on each investment as it is added, they should not be too surprised with an aggregate figure. It helps a lot if they are making money and happy with the results.

5. Have you considered earning tax exempt instead of taxable interest income? This was not a big issue when interest rates were near zero, but 5% returns on shorter term deposits have been seen in recent months. For clients who stick to bonds and CDs, this could start to impact their tax bill in the future.

Client: You have likely had this conversation. As interest rates have risen, you will probably bring it up again. If their accountant mentions it to them and they relay the message to you, you can address it.

6. How often are you and your financial advisor in touch? They are interested in how much attention and active management you are getting for the fees you pay. Put another way, who is driving the bus? If the client is a self-directed investor, calling the shots on individual stock trading, the advisor might be an order taker. This is unlikely in today’s world of online trading. Ideally you are in touch on a regular basis.

Client: It is a smart strategy to remind clients how often you speak on a regular basis. A conversation might start: “When we last spoke in April, you mentioned you were concerned about…” You might also mention periodic reviews and your annual review. Your client should be able to explain you keep in close contact and you are usually the one who initiates the conversation. You are proactive.

These instances are ways you solidify the relationship with your client. Your client’s answers will likely impress their accountant too. Who knows where that might lead.


Related: 10 Ways To Find New Clients Through Current Clients