As financial planning and tax planning become increasingly integrated, financial planners should be forming closer relationships with their clients’ accountants, according to Kenneth Morrison, owner of Vancouver-based Provision Accounting Group.
Speaking at the Institute of Advanced Financial Planners’ 2012 Symposium in Vancouver on Thursday, Morrison noted that the relationship between financial advisors and accountants has changed in recent years. While tax planning was typically handled separately from financial planning in the past, there’s been greater overlap between the two disciplines in recent years, as tax planning has become a key part of the comprehensive financial planning process, Morrison said.
“We tell our clients now: ‘I have to be on a first-name basis with your financial planner, or we’re not able to give you the service you need’,” he said.
Morrison explained that financial planners likely have more information about the clients’ overall financial picture, and they may be able to help the accountant identify strategies and tax-planning opportunities that might not otherwise be obvious.
“If we work together on it,” he said, “we can really provide better service.”
He recommends that when financial planners begin working with a new client, they request the contact information for the client’s accountant. Accountants would appreciate the opportunity to gather more context on the client, and another professional’s perspective, Morrison said.
“You have skills, and you have expertise that we don’t have, and the client needs both,” he said.
Clients with complex tax situations, in particular, need plenty of advice and guidance on an ongoing basis, Morrison added. Every client’s situation is different, he explained, and one client’s situation can change considerably from year to year.
“Tax planning is very individual,” he said. “Do not use rules of thumb, and do not assume that what worked for a client in year one will work year two or three or four.”
Tax planning advice has become especially important in recent years, Morrison added, as the Canada Revenue Agency’s (CRA) auditing process has become more demanding. The CRA now looks more closely at the details of each case, he explained.
“You’ve got to dot your Is and cross your Ts on all of this documentation,” he said. “The rules have changed, the courts have changed, and now they’re looking at the fine points.”
To help clients navigate the auditing process effectively and efficiently, advisors should urge clients – above all else – to respond to the CRA on a timely and accurate basis, and be co-operative, Morrison said.