Tax-planning certification rolling out as wealth and tax divide narrows

More than 1,600 financial advisors have rushed to register for a new tax-planning certification, hoping to add to their skill sets as wealth and taxes become more intertwined.

In a LinkedIn video last week from the American Institute of Certified Public Accountants' Engage conference, Jeffrey Levine unveiled the new designation, the tax planning certified professional, that will launch later this year in the form of three courses administered by training and education organization The American College of Financial Services. Alongside Levine — a Financial Planning contributing writer, the lead financial planning nerd of Kitces.com and the director of advanced planning for Buckingham Wealth Partners — the participating experts include planning entrepreneur Michael Kitces, individual retirement account guru Ed Slott and estate and small business lawyer Sophia Duffy.

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Historically, advisors have treated tax-related topics as a "third rail" apart from their primary expertise, effectively saying, "We're just going to sidestep and go to the other room," by referring clients' questions to an outside CPA or other professionals, Levine noted in an interview. Now, more wealth management and accounting firms are investing at the intersection of the related but often separate fields in a bid to retain and expand their relationships with clients who are increasingly expecting their planners to perform tax-related services. 

Tax represents an area "where mistakes are really costly and, at other times, irrevocable," Levine said, noting the contrast with investments that could recover over the long term or go toward other assets.

"There are certain things you can do from a tax-planning perspective that can absolutely destroy a retirement or a business," he said. "They want tax planning from their financial advisor. It's not just they want tax planning. They want tax planning from their financial advisor."

Levine approached the College about a year ago, and the organization's chief marketing and strategy officer, Jared Trexler, had already been conducting research about a potential designation in the tax area after noticing the growing connections between the two fields, Trexler noted in an interview. The thousand-plus of advisors expressing interest in joining or attending the courses as students came less than a full week after posts by Levine and the College about the new certification, Trexler noted. 

Organizers are considering the potential format of any examinations, and the cost is $995 per course or $2,695 for all three. Each asynchronous class takes about four to six months, although Trexler suggested that an advisor could finish all three over a year or less.

"Whether advisors want to call it that or not, they're always doing tax planning," he said. "We view tax planning as a key part of that library of specialized programs. … There isn't formal education out there bringing together Jeff and all the experts that he's helping to cultivate."

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Some of the largest firms in the industry are already moving into tax-related services. Chicago-based multifamily office Cresset Asset Management, which just reached $52 billion in client assets last week after acquiring The Connable Office, provides tax preparation for clients as well as tax-focused planning such as guiding customers through startup liquidity events, Cresset President and Chief Operating Officer Susie Cranston said in an interview.

"Tax alpha" is "going to become a more and more important factor for clients," Cranston said. "The savings that you get on taxation is effectively a guaranteed return."

The new designation followed other professional development news reflecting the ties between wealth management and taxes. For instance, the AICPA added personal financial planning questions to the CPA exam this year at the urging of practitioners with that organization's personal financial specialist credential. The exam for the CFP designation also includes tax planning subjects on 14% of its questions as one of its "principal knowledge domain and topics."

Noting that the certification is "not meant to be an introductory" course, Levine suggested students should either be certified financial planners already or hold "some sort of comprehensive financial designation" before attending the courses. 

The three classes will follow a client's stages of life, with the first course focusing on tax planning during their accumulation stage, the second on their retirement and the third on their estate and other special situations. They'll cover "the implementation of strategies and helping advisors to build the Rolodex" of services in their practices rather than topics that are more germane to CPAs or enrolled agents such as compliance, preparing returns or representing clients before the IRS, Levine said.

"That's really our goal, is to help educate more advisors so that they can, in turn, go back and give better advice to the clients they serve," he said.

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While acknowledging his "dream scenario" is "a difficult and lofty" one, Levine hopes the new mark will emerge as one of the main designations that future consumers keep in mind around financial advice alongside the juris doctor, the CPA and the CFP, he added.

"I'd like the certified tax planning professional to be the fourth arrow in that quiver," he said. "We want people to be able to graduate, if you will, from these courses, to sit down with the overwhelming majority of people who come into their offices and be able to give some meaningful guidance."