How Should Advisors Talk to Clients About Tax Planning?

Tax management—from deciphering constantly changing tax laws to creating tax-planning strategies and implementing tax-saving initiatives—may sometimes be overwhelming, but it’s also a prime opportunity for Financial Advisors to showcase their expertise.

But planning ahead is key.

“It comes down to being intentional with your strategy,” says Stacie Nemetz, CFP®, AIF®, a Financial Advisor with Apella Wealth. She often asks clients, “What is your overall goal?”

With your clients’ goals in mind, you can customize strategies to help offset tax penalties in several key areas, including:



Gift and estate taxes apply to transfers of money, property, and other assets. These taxes only pertain to large gifts made by an individual while they’re alive or large amounts left to heirs.

The lifetime gift tax exemption, which is adjusted annually for inflation, is the amount of money or assets an individual can give away over the course of their lifetime without incurring federal gift taxes.

Since federal gift tax rates range from 18% to 40%, avoiding these taxes can save investors a substantial amount of money. The current lifetime gift tax limit is $12.92 million.

Again, Nemetz recommends asking important questions, like, “What is it you want to pass through your estate that you may be able to gift during your lifetime? Does it make sense to gift to your children or grandchildren?”

She reiterates, “The federal exemption is pretty high right now. Not a large percentage of our population will hit it. We also know that in the future the federal exemption will probably be lower, so can you gift something now and take advantage of the current environment?”

Bear in mind that while the federal government imposes gift taxes, some states have separate gift tax regulations. Since state laws vary, it’s important to understand the specific rules and limits in each state.


529 Plans

“In terms of gifting as a means of helping your children or your grandchildren, money can also be gifted into a trust fund or education, or put in a 529 plan,” notes Nemetz.

A 529 plan is a tax-advantaged savings plan that can help pay for future education costs. A 529 plan grows tax-deferred. Withdrawals are tax-free if they’re used for qualified higher education expenses or tuition for elementary or secondary schools.

One prime benefit of 529 plans is the high contribution limit. Because each state operates its own 529 plan and makes its own rules for the plan, maximum contribution levels vary from state to state. 529 plans 529 Plans can also play a role in estate planning, including reducing current and future tax liability, and passing on wealth to children and future generations.


Roth IRAs

A Roth IRA is subject to the rules that apply to a traditional IRA, except:

  • You cannot deduct contributions to a Roth IRA
  • Qualified distributions are tax-free
  • You can make contributions to your Roth IRA throughout your life
  • You can leave amounts in your Roth IRA as long as you live

The same combined contribution limit applies to all Roth and traditional IRAs.

“Between the time a client retires and the time they pass, I find it extremely helpful to address future plans. Particularly for clients with low expenses and their Social Security, maybe there’s a pension involved or some after-tax assets in their IRA growing,” notes Peter Leppones, CFP®, with Apella Wealth.

“The RMD age is now 73, so for a client who’s 65, it’s not a concern today, but down the road, they’re going to be forced to take money they don’t necessarily need,” he says.

“Can we start to do things now? Does it make sense to start taking some of that now, maybe with Roth conversions?” Leppones asks his clients. “We don’t necessarily need to do anything today. But I encourage them to start thinking about it because they’re going to be forced to take out $50,000 to $70,000—maybe more—they don’t need, and they’ll have to pay taxes on it,” he explains.

“A Roth conversion won’t have an ultimate tax consequence to your children when they inherit those assets,” adds Nemetz.

“For some of our clients, we may recommend taking out additional life insurance to help their children pay that liability,” she says. “That may be a big concern. Some clients think: Well, they’re getting something, even if they have to pay tax. Going into it with eyes wide open is really the most important.”


Tax-Efficient Giving

By understanding and implementing tax laws and regulations, individuals can maximize the impact of their charitable donations while also optimizing their tax benefits.

“More and more of my clients are using donor-advised funds to establish and be intentional with their money and establish a budget. We’re encouraging clients to use donor-advised funds with a high standard deduction,” explains Nemetz.

“A lot of the cap is on state and local taxes. Many people are using the standard deduction, especially our clients who have paid off their homes and don’t have a lot of medical expenses,” she adds.

“You can see quickly where the standard deduction is more favorable, but they are charitably inclined. A donor-advised fund is a great way to bunch together contributions. You can open a charitable donor base fund at Schwab, Fidelity, or Vanguard, and as soon as you make that contribution, it’s irrevocable. So, you get the credit in that tax year,” continues Nemetz. “You can also donate to the charities of your choice over a period of time. You don’t have to do it all this year.”


Behavior Management & Taxes

With more than 25 years in financial services, Leppones shares that planning is half his job. “The other half is behavior management, keeping everybody in their seats when things get a little nerve-wracking,” he says.

“It’s not just about the investments, it’s about planning in these tax situations and looking at what’s happening today, what could potentially happen tomorrow, and what action can be taken to help to mitigate those tax situations,” he underscores.

Part of behavioral coaching involves being “more intentional and more focused. And we need to have a discussion,” emphasizes Nemetz.

“Those conversations can be unpleasant at times, but I’d rather have the unpleasant discussion and have some type of planning in place,” Leppones admits. “Having a financial plan provides a level of comfort to your client and helps them understand the ramifications of long-term changes.”

Unlike investment returns, tax planning tends to be more predictable and controllable, offering Financial Advisors the chance to add real, definable value for clients year after year.


Interested in learning more about how to help your clients develop a legacy plan? Watch a replay of our webinar Death, Education, & Taxes, which was featured during Symmetry AdvisorFest 2023.



Symmetry Partners, LLC provides this communication on this site as a matter of general information. Information contained herein, including data or statistics quoted, is from sources believed to be reliable but cannot be guaranteed or warranted. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. All content on this site is for educational purposes and should not be considered investment advice, recommendation, or offer of any security for sale. Symmetry Partners does not provide tax or legal advice and nothing either stated or implied in this material should be inferred as providing such advice. Symmetry Partners does not approve or endorse any third-party communications on this site and will not be liable for any such posts.

Symmetry Partners, LLC is an investment advisory firm registered with the Securities and Exchange Commission (SEC). The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Symmetry Partners, LLC and Apella Capital, LLC, DBA Apella Wealth are affiliated entities.

Investing involves risk, including the loss of some or all of your principal. Diversification seeks to reduce volatility by spreading your investment dollars into various asset classes to add balance to your portfolio. Using this methodology, however, does not guarantee a profit or protection from loss in a declining market.

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