Your Post-Tax Financial Planning Meeting

Booking your annual post-tax financial planning meeting is really important. Why, you ask? Well, because it gives your financial advisor a chance to look over your full return (yes you MUST take your full tax returns to these meetings, not just the one-pager) so they can give you advice for the coming year.

They can help you decide which buckets you are going to put your money in and how to make the best choices so you don’t overpay on your taxes the next year.

If you want to learn more about why these meetings are so important and what you should expect from them, listen to episode 22 of my podcast.

Show Notes:

Hello, and welcome back to another round of, “Our Heart of Money Talks”. This is episode 22, and I’m going to share what you need to know about your post-tax financial planning meeting. The saying is nothing can be said to be certain except death and taxes.

These are the two things I see financial advisors skipping over the most.

They might be busy going in straight to the investment products and skipping the two most certain things, death, which I’ll call estate planning and your taxes. If that’s the case with your advisor, visit my previous episode #15, on how to give your advisor the pink slip.

Now, because we just finished tax season, it’s time to meet with your financial planner and have a check-in. This is important because you want to prepare for the rest of the year. You want to take a look and project ahead, see if you’re saving in the right bucket, see if you can save on taxes or look to see if any changes need to be made. But by reviewing last year’s tax return, your advisor can provide a second set of eyes, in case maybe there was a mistake in filing the return, which allows you and your accountant to file an amended return.

If needed by performing a tax projection, your advisor can help you understand what your tax bill could look like next spring and discuss what options you might have if you feel like you need to change course. It’s always best to stay ahead and be prepared. Now I always ask myself why don’t more advisors do this.

So a couple of things come to mind just right off the top of my head. Maybe it’s about the work. Maybe they just don’t want to do the work. Think about it. They’re being paid in whatever compensation method- hopefully, it’s a fee-based transparent, 1%, but they’re thinking, “I’m already getting paid or I’ve already been paid and I just don’t want to do the extra work.”

So lazy tax projections are involved, just getting your tax return, not learning more about your life, then thinking proactively about things that might happen that could impact your tax bill. This takes work. Ironically, this is also where we uncover tax planning opportunities. So it’s all about taking the time. Or, maybe another reason the advisor says they don’t want to be held accountable for giving unlicensed tax advice, yet they might recommend selling investments that cost hundreds or thousands of dollars in capital gains.

So they can put your money into another investment. Yikes. I hope that isn’t happening. Every time your advisor recommends that you sell something, they are already giving you advice that has tax implications. Tax knowledge is part of being a financial planner and, and hopefully, you have a certified financial planner because that is part of the courses.

The years of study and exams tax is important. They should at least educate themselves to the point where they can tell you some of the things you can look up on your own. And we’ll always start discussions with, “I recommend we check with your accountant, but I think, and then you go from there.”

So let’s jump back to this post-tax meeting that you should be having for this meeting.

You should expect to bring a copy of your tax return, like the full copy, sometimes there’s a page, the T1 page or just the notice of assessment. Bring the full tax return. It lets us see a lot more. In our office, we send notes and reminders asking people for copies of the tax return and the notice of assessment.

I look at it. The notice of assessment is a summary you get after you file, it shows your income amount of tax. And it also shows us how much RSP room you have going forward. The same thing for the tax-free savings account. It helps me track to make sure you don’t go over your limits.

The copy of the return lets me see what other deductions we might be able to use. So here’s an example of a common golden nugget. We have found with couples and it’s where one partner is the higher income earner, but they have RSP savings occurring for the other person, the lower-income earner. This is something we look at as a couple and can see that if we switch, who gets the tax deduction, there are extra tax savings.

We can find for the family as a whole.

Now that’s just one very general example, but it shows why we need to review and link things over right after tax time. That is one we catch at least once a year with new clients and we can take a look and see where the savings should be and in what bucket. This meeting is also the time that we can offer to consult with your accountant before any big moves.

Maybe it sparked a thought…” I do plan on retiring or there’s going to be a severance or I’m changing jobs or this.” All the what-ifs. We want to be a part of it and prevent any tax mistakes possible. An accountant can’t fix many things after the deed is done.

The phrase an ounce of prevention is better than a pound of cure has never been more appropriate than in the world of taxes. The accountant wants to know before things occur so they can help guide accordingly. Having an advisor offer to consult and steer the direction and offer advice means that’s one less thing that you have to manage.

Taxes are a fundamental part of the financial planning process. Now, while many professionals recognize this fact, often there’s a gap between what the financial advisor sees and what the tax professional sees. More likely than not, the accountant will assume that you are filling in this gap when you probably are not.

You might only see the accountant once a year dropping things off and maybe it’s to the front admin person that takes it all in. Then the accountant does it and just sends you a folder, your financial advisor, your certified financial planner, you see them often, they know your story. They’ve gotten to know everything about you and your finances.

They’re the ones that should be helping you fill in the gap. They can coordinate with the accountant, but they’re the ones that know you and even doing the work for you, where they can. Hopefully, if you haven’t already, please book that post-tax financial planning, meeting with your financial advisor, bringing a copy of your full tax return.

Also, bring in a copy of your notice of assessment. Make note, know what pensions you have the amounts and where all your other savings are and have that conversation and plan for the rest of the year. If your financial, advisor’s not doing this, ask them to start today. Make sure you have your post-tax financial planning meeting.

It sets you up for a win for the rest of the year. That’s it. Until next week, take care.