Keep clients coming to you with PFP services: A tax practice can weather demographic and technological changes by expanding its reach in financial planning.

Author:Vien, Courtney L.

The tax landscape, like many areas of accounting, is changing rapidly. Automation has made it easier for both clients and firms to complete tax work. Consumers have started to expect more from tax practitioners than just compliance. And some financial advisory firms are offering to complete clients' tax returns at little or no cost along with providing them financial planning services, further cutting into tax practitioners' client base.

To diversify their services and make themselves more competitive in this climate, many CPAs specializing in tax services to individuals have started offering clients financial planning services, such as retirement planning, estate planning, risk management, and investments. For the tax CPA with the right blend of technical and people skills, adding financial planning services (or more formally promoting the ones they already offer) can be a compelling option (see the sidebar, "Where to Learn More"). It can help CPAs make their practices more robust and secure, spread out their workload across the calendar year, and experience the rewards of giving clients additional much-needed services.


Automation has taken an increasing share of the tax preparation market in recent years. In 2018, for instance, U.S. taxpayers electronically self-filed 35.9% of all individual tax returns, compared with 17.4% in 2008. They filed 41% of all electronic returns by themselves in 2018, compared with 29.9% in 2008. In contrast, practitioners, including CPAs, filed 59% of electronic individual U.S. tax returns in 2018, down from 70.1% in 2008.

"The reality is that simple tax preparation has become more of a commodity," said Jared Trexler, CPA, shareholder of Trexler & Company PC and founder of Trexler Financial Advisors LLC in Pana, Ill. Trexler is in the process of earning the PFS credential.

Members of younger generations, who are comfortable with technology, may be more willing than their elders to turn to software for their tax needs. They may also choose software, given that they have less discretionary income than older generations and it is typically cheaper than hiring a practitioner. "I don't get younger clients in the door with simple tax needs," Trexler said. "I assume more of them are self-preparing online."

Some financial services firms have started offering to prepare clients' taxes as part of the service packages they provide. In fact, 54% of non-CPA financial planners now offer tax services, and the number of investment advisers offering tax services to individuals almost doubled between 2013 and 2015.

Lyle Benson, CPA/PFS, owner of L.K. Benson & Co. in Baltimore, said he had noticed this trend affecting his own practice. "The clients who are more tax-oriented are doing their own returns or finding cheaper alternatives to getting their compliance work done," he said. "If we're not providing broader services, they don't see the value in the amounts we charge."

At the same time that tax work is becoming automated, the need for financial planning services is growing. The Bureau of Labor Statistics predicts that demand...

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