Tax season is upon us. While it is unlikely you will be handling your client’s taxes, there are opportunities to be found within their tax returns.
Those tax returns tell a story. This snapshot of last year’s financial activity is a great resource that advisors can use to help write the next chapter, one addressing the short and long-term goals of clients and prospects.
Careful examination of a person’s tax returns can reveal a wealth of information about their current situation, along with their immediate and long-term needs. Are they retirement ready? Will they be able to leave a legacy behind for their loved ones? Is there a need for life insurance or additional savings vehicles?
Basic and Immediate Needs
No matter their income, your client/prospect will need some form of financial protection. Whether it be to cover debt or unexpected medical expenses, replacing their income after death, or college funding for their children; everyone has a set of basic needs to address. Looking over their tax returns can open the door to conversations about what those needs are and how you can help fulfill them.
Long-Term and Retirement Goals
Clients and prospects nearing retirement age have an extra set of concerns to address. How ready are they to step away from the workforce and enter retirement? Analyzing their returns can help guide this conversation by arming you with information and questions relevant to their unique situation. If the client/prospect is already retired, use this information to discuss any lingering need for long-term care or additional income. This can be especially useful for those who want to ensure their final costs are covered and/or leave an inheritance to their children and grandchildren.
Business Planning
Clients and prospects who own a business can greatly benefit from a comprehensive review of their tax returns. Not only do they have their own needs to address, but also those of their employees and business operations. The hit many business owners are taking due to supply chain issues and rising fuel costs makes the conversation about short and long-term financial planning more important than ever. Your ability to delve into the story told by their tax returns is a great way to start the conversation about how you can come up with a plan that does two things – keeps their business afloat during these difficult times and carries their personal finances through to retirement.
Take A Closer Look
Are you looking for resources designed to help you offer these comprehensive tax return reviews? IAMS is now offering our 1040 Overlay Kit. Updated for 2023, the kit is a great way for you to read a client or prospect’s in-progress or completed tax return. This complimentary tool helps you to identify financial protection and planning needs in an easy and effective manner.
The 1040 Overlay Sales Kit includes:
- IRS Form 1040 and Schedule A overlays
- 1040 Guide for Tax Returns
- Prospecting letters to tax professionals and their clients
- 2023 tax facts and tables
