Tax planning and advisory services are a growing extension of tax preparation; based on the 2022 Taxpayer Insights & Intelligence Brief, research indicates that more than a third of tax professionals not currently offering tax advisory services are strongly considering adding tax advisory to their practices.
However, some common myths often prevent preparers from getting started. Here are the top five myths we hear from preparers considering adding tax advisory services.
Myth #1: I need to know everything before I get started
As tax professionals, we pride ourselves on our deep tax knowledge and efficient processes, so it’s only natural to want to have our tax advisory services fully defined before we begin engaging clients. Some preparers plan for years before they engage their first client in tax advisory. The truth is that they are still unprepared because we make assumptions about what clients want that aren’t accurate. We learn best when we practice—and we practice on clients.
Dawn Brolin, CPA, and owner of Powerful Accounting said, “The hardest part about adding tax advisory services is convincing clients they need these services, so we started there. We picked up the phone to sell the first few tax advisory engagements, knowing we will figure out how to deliver the services later. Just get started.”
The reality is we don’t know everything about our current services, but we do know how to research issues and solve complex tax problems. Most preparers already know enough to launch and learn.
Myth #2: I can’t update my services with existing clients, so I’ll start with new clients
Your current clients already know you, trust you, and are already paying for compliance services. Research shows 69% of taxpayers want more advice from their tax professional. In other words, clients are waiting for you to provide proactive advisory services.
Your current clients already know you, trust you, and are already paying for compliance services … in other words, clients are waiting for you to provide proactive advisory services.
Almost every firm that currently leads with tax advisory services started with existing clients. And clients overwhelmingly appreciate the proactive tax saving strategies and help reaching their financial goals.
Myth #3: My clients won’t pay for it
Research shows that 79% of taxpayers are willing to pay more for a tax professional’s services if it might result in improved financial outcomes, such as reducing their tax liability. Advisors say the best tax advisory clients are those with businesses, real estate investments, and complex tax situations.
Firms tell us that when they introduce new tax advisory services and new pricing, especially with three options that all include planning, most clients say “sign me up.” Data also supports that clients pay about five times as much for proactive planning as they do for tax preparation, another reason to launch and learn tax advisory services. You may get pushback from a few, but likely those are not a good fit for your new services and may provide a good dis-engagement opportunity.
Myth #4: I don’t have the capacity or the team to deliver these services
This is often true with firms that lead with compliance, because compliance workflows are often client-dependent, resulting in delays, extensions, and workflow compression.
However, firms who lead with tax advisory often cite they changed for a better work-life balance, including reducing the crazy hours they were working. Calendaring recurring proactive planning meetings with clients ensures books are current, avoids surprises, and results in more tax saving strategies. Firms can prepare tax returns on their schedule, instead of the reactive client, resulting in almost all business returns being completed before the first business deadline. This creates months of new capacity, helping firms work fewer hours, deliver more value, and earn higher fees.
To support firms delivering tax advisory services, we launched Intuit Tax Advisor, which reduces the time to prepare a typical tax plan from 2.3 hours to about 22 minutes, with a better deliverable that showcases your expertise.
Myth #5: My clients will be upset I haven’t offered these services in the past
Firms that crossed the chasm to lead with tax advisory say this almost never happens, but if it does, they recommend saying “Our old model prevented us from offering proactive planning, which is why we are updating your services now.” Problem solved!
Research shows 83% of taxpayers would rather work with a tax professional who can give tax advice year round, in addition to filing their tax return. Use this to frame your new services: “Based on the growing complexity of business, regulations, taxes, and in response to requests from clients, we are adding tax planning and advisory services for all our business clients.”
Leading with tax planning and advisory services is a journey, not an event. Launch, learn, and tune. Before you know it, you’ll be sharing experiences that also dispel these common myths.
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