Hands shown in an office.

Tax reform: A catalyst
for client engagement

The Tax Cuts and Jobs Act is the most significant reform to the U.S. tax code since 1986.  For those of us, myself included, who have spent our careers in accounting, finance and law, it’s an exciting time in our industry to have the tax code so openly debated, analyzed and explained on the national stage. 

But for individual taxpayers, businesses and many business owners, it can be a confusing time to navigate all this change. 

Tax planners, accountants and attorneys are already in high-demand to engage with their clients to discuss how the new laws could affect their short- and long-term goals. But for those of us in the financial advice business, there is an important role we can play here as well, the catalyst. 

I’m often asked to bring together experts or centers of influence to help shape a client’s financial planning needs.  And that’s the important and value-add role I see advisors taking as tax reform plays out across the country – the catalyst for important discussions and decisions as they relate to your clients’ long-term financial futures.

Three questions to engage your clients:

1. Do you have the right structure?

Sole proprietorship, partnership, corporation, S corporation, LLC – with so many potential business structures to choose from, which is best for your business? The tax reforms can have a significant impact on businesses over the short- and long-term.

Now is the right time to have the discussion with your clients whether their current business structure is really the one that is best suited to help them toward achieving their short- and long-term goals in the current tax environment.

2. What are your priorities?

Effective immediately, and maybe more so going forward, many businesses might find themselves with extra money and cash-on-hand.But what is the best use for any additional funds from the tax changes? For many businesses and especially small businesses, the choice comes down to investing in either:

  • Talent: The current environment is making the job market for job seekers very attractive and there is a war for talent amongst all businesses, but more so for smaller businesses as candidates weigh their options.  Providing added incentives, benefits or bonuses to employees can help you attract and retain the best talent. 
  • Growth: Or maybe your business would be better served in expansion – investing in new technology, facilities, expansion, product development, to make your business more competitive in the future. 

3. How can I help?

Even with the expertise and careful consideration of a CPA or attorney, I always say the earlier in the process financial advisors can get involved in the planning and preparation for the short- and long-term success after tax reform, the better.

Advisors will have the opportunity to highlight topics that perhaps weren’t considered prior to his or her involvement in the conversation.Topics such as retirement-related issues regarding Roth IRA conversations, estate and gift tax exemptions, pass-through entities or succession planning.

Lastly, it is important that advisors work together with legal or accounting representatives to discuss which elements of the tax reform law are permanent, temporary, and increase or decrease after 2025.

As an attorney and former tax consultant, historic and sweeping tax reform is a pretty big deal for me.  But advisors shouldn’t let attorneys and tax planners have all the fun.  As an advisor, you can be a catalyst to help your clients bring together their professional advisors to think through the issues more holistically, taking into account short- and long-term challenges and opportunities and what the future might hold.

- Bob

ABOUT THE AUTHOR

Bob Appel

Bob Appel is a Vice President of National Design/Advanced Planning at Lincoln Financial Network. In his role, he is responsible for supporting advisors with their clients, financial planning needs including case design, analytic support and legal and legislative interpretation. He also provides coaching and conceptual sales training.  His previous experience includes serving as a Senior Tax Consultant and Assistant Manager of Financial Services for financial services firms. He was in private practice of law and continues to be a consultant to other attorneys and law firms. A member of the American Bar Association, he studied Accounting and Finance at Central Connecticut State University, received a JD degree from what is now the Quinnipiac University School of Law, an MBA (Finance) degree from the University of Connecticut, and LL.M. (Taxation) degree from Boston University School of Law.