In today’s competitive wealth management landscape, many affluent clients have come to expect more from their advisors than solid investment returns. They seek a wide range of strategies that work together to grow and preserve their wealth, and proactive tax planning has become an integral part of the client experience.

When done well, tax planning has the potential to position your firm as an indispensable partner. When done poorly, it can become a liability that may erode trust, limit long-term growth and contribute to client turnover.

The tax planning gap

Many advisory firms claim to do tax planning; however, the scope and depth of those services can vary significantly. In some cases, firms may face resource, capacity or expertise constraints that limit the integration of proactive tax strategies into a client’s financial plan. This may result in missed opportunities and unnecessary tax exposure.

The gap may be especially costly for complex clients. For example, research highlights that ultra-high-net-worth (UHNW) individuals with $30 million or more in investable assets have an average of four homes and allocate 20% of their wealth to tangible luxury items such as art, jewelry, wine and other collectables.¹

In addition, these clients typically have highly intricate balance sheets that frequently span multiple entities, global assets, businesses, trusts, illiquid holdings and more. A standard approach to tax planning is unlikely to address the complexities of multiple real estate holdings, qualified business income deductions, opportunity zones investments, estate tax exposure and cross-border investing.

Clients with this level of complexity and sophistication may be likely to notice when their advisor’s approach to tax planning is reactive, rather than proactive. When their peers have access to sophisticated tax modeling and dedicated tax professionals, the UNHW client who does not may begin to question his/her current advisor’s expertise and ability to manage a complex balance sheet.

This perception can quickly turn an advisor’s tax offering into a weakness, rather than a strength.

Tax planning as a differentiator

When executed in a proactive, integrated manner, tax planning has the potential to set your firm apart from the competition.

Rather than simply coordinating a client’s year-end filing with a CPA, many successful advisors often work with tax professionals to establish a holistic approach to tax planning, incorporating strategies across investments, retirement savings and distribution strategies, charitable giving, estate planning, large purchase planning, real estate, executive compensation and business planning.

The potential client benefits of a proactive, year-round approach to tax planning may include:

• Higher after-tax investment returns through strategies such as asset location and tax-loss harvesting.
• Reduced drag on complex holdings through strategic decisions surrounding multiple properties, businesses, trusts and illiquid assets.
• Income tax savings resulting from the strategic use of Roth conversions, charitable remainder trusts, opportunity zone investments, qualified business income deductions, etc.
• Lifelong, tax-efficient retirement savings and distribution strategies that help minimize the risk of tax bracket creep and surprise tax bills.
• Optimized estate and legacy planning through lifetime gifting and multi-generational wealth transfer strategies.

The potential advisor benefits of a proactive, year-round approach to tax planning can include:

• Improved trust and confidence as clients see the difference a strategic approach can have on their bottom line.
• Higher client retention and increased referrals as clients are less likely to switch firms.
• Support for premium fees because the focus on tax planning positions the firm as a high-value partner rather than a commodity investment manager.
• Compounding long-term impact as tax savings, if achieved, accumulate in clients’ accounts over time.

At Mariner, our advisors are supported by an in-house team of dedicated tax professionals who focus on year-round, proactive tax planning. Our tax planning services are designed to be integrated into our clients’ financial plans, helping provide greater confidence and clarity when making financial decisions.

As client needs become more sophisticated, an integrated tax offering can help advisors strengthen relationships, deepen trust and deliver value that extends well beyond investment performance.

Finding the right balance between freedom and support

Many successful advisors may discover that operating with complete freedom hinders, rather than enhances, their ability to effectively support clients, while strategic partnerships and structured resources allow them to focus on the high-value work of building client relationships.

In a competitive and complex market, the most successful practices are often those that are able to prioritize the client experience above all else.

Sources:
1. https://www.knightfrank.com/site-assets/research/reports/the-wealth-report/previous-editions/the-wealth-report-2024.pdf
This article is provided for informational purposes only and is not intended as tax, legal or investment advice. The tax planning strategies discussed may not be appropriate for all individuals and their effectiveness depends on a variety of factors, including a client’s particular circumstances and changes in applicable tax laws. Any references to potential tax benefits are general in nature, depend on individual circumstances, and do not guarantee future results or tax savings.
The third-party information provided herein is believed to be reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties.
There is no assurance that any investment, plan, or strategy will be successful. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results, and nothing herein should be interpreted as an indication of future performance.
Mariner is the marketing name for the financial services businesses of Mariner Wealth Advisors, LLC and its subsidiaries. Investment advisory services are provided through the brands Mariner Wealth, Mariner Independent, Mariner Institutional, Mariner Ultra, and Mariner Workplace, each of which is a business name of the registered investment advisory entities of Mariner. For additional information about each of the registered investment advisory entities of Mariner, including fees and services, please contact Mariner or refer to each entity’s Form ADV Part 2A, which is available on the Investment Adviser Public Disclosure website. Registration of an investment adviser does not imply a certain level of skill or training.
The registered investment adviser entities of Mariner do not provide all services included herein. Some services are provided by affiliates and may be subject to additional fees. For additional information, refer to www.marinerwealthadvisors.com/legal/.