Getting your Financial Advisor & Tax Preparer on the Same Page
by Rick Zich, Southwest Investment Advisors & Mikala Jansen, Jansen and Company CPAs
Most clients assume their financial advisor and CPA are already talking.
Usually, they aren’t.
That’s not because either professional is doing something wrong. They simply solve different problems. A CPA is often focused on accuracy, compliance, and filing taxes correctly. A financial advisor is focused on long-term strategy, cash flow, investments, and future planning decisions.
The problem is that many financial decisions don’t stay neatly in one lane.
A Roth conversion affects taxes.
Stock sales affect taxes.
Retirement withdrawals affect taxes.
Business income affects taxes.
Even Medicare premiums can be affected by planning decisions made years earlier.
The clients who navigate these decisions best usually have professionals working together instead of separately.
Recently, I (Rick) sat down with Mikala, a CPA with Jansen and Company CPAs, who SIA works closely with, to talk about the ways advisors and CPAs can help clients make better financial decisions.
Mikala: Most clients don’t think about tax planning until March. By then, we’re mostly documenting what’s already happened.
Rick: That’s one of the biggest misconceptions we see. Good planning happens before the year ends, not after.
Mikala: [nods]. Exactly. If a client is considering a large IRA withdrawal, selling a property, or exercising stock options, those conversations should happen before the transaction occurs. Once December 31 passes, many opportunities disappear.
That’s where collaboration becomes valuable.
A financial advisor may identify a Roth conversion opportunity during a lower-income year. The CPA can then project how much room exists within a certain tax bracket and whether the move could affect Medicare premiums or deductions.
Neither professional sees the full picture alone.
Mikala: We also see clients accidentally create unnecessary stress. They drip tax documents over several weeks, send partial information, or assume we already know about major life changes.
Rick: Which usually creates more work for everyone.
Mikala: Exactly. The smoothest tax seasons happen when clients stay organized throughout the year.
So, what does that look like in practice?
Mikala recommends clients create a simple digital folder where tax documents are stored as they arrive instead of waiting until February. W-2s, 1099s, charitable donations, property tax statements, and investment documents all go into one place. Knowing which income-generating accounts you have and keeping track of which documents arrive by mail, and which require proactively logging in to retrieve online, is also helpful.
Mikala: It sounds simple, but organization alone eliminates a huge amount of stress.
Rick: I’d add one more thing: communication.
If your income changes significantly, you retire, inherit money, sell a business, exercise stock options, or plan a large withdrawal; both your advisor and CPA should know before decisions are finalized.
Too often, clients unknowingly act as the messenger between professionals. Information gets lost. Planning opportunities are missed.
The best outcomes usually happen when everyone works from the same set of facts.
Mikala: Clients don’t need their advisor and CPA talking every week. But they should absolutely be aligned on the major decisions.
Financial planning is rarely about one perfect strategy. More often, it’s about coordination. The families who do this well typically aren’t more sophisticated than everyone else.
They just build a team that communicates before important decisions are made.
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
Southwest Investment Advisors and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
