Traditionally, households have turned to their accountant for tax advice and to their broker or other financial advisor for investment advice. But in recent years, those lines have started to blur. In fact, according to the Journal of Accountancy, of the 334,635 AICPA Members, approximately 20% are now registered investment advisors. This allows those advisors to provide holistic tax planning advice in conjunction with investment advice.

And it’s about time! Investors are increasingly comfortable with the concept of one financial services firm providing all of these services. It’s interesting to note that in 2004 for the first time, accountants were identified as the primary advisor for 28% of HNW households - just behind full service brokers.

At least 43% of HNW individuals have a financial advisor and tax planner who is either the same individual or there is close collaboration between the two. About a third of HNW individuals have financial advisors and tax planners that do not collaborate with each other. For over 50% of affluent individuals, tax planning is an ongoing process. Just over a quarter of the affluent investors think differently and more frequently about their taxes during year-end and the first quarter than at other times of the year.

While more CPAs are becoming investment advisors and more advisory firms are adding planning services, consumers have not yet made the link and most are satisfied with the status quo. They are not unhappy if their financial advisor does not provide tax advice. Investment advisory firms are also increasing their overall financial planning capabilities. While it is difficult for one individual to become a specialist in all of these fields – advisors to the affluent must prepare for the next important trend – how to provide holistic financial and tax advice.  As various types of firms seek to increase their capabilities, investors will eventually begin to see their desire for coordinated financial services fulfilled.  Will your firm be ready?

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