In Partnership With: In Partnership With: HD Vest Financial Services

Tax Alpha: The Fundamentals


Welcome to Tax Alpha! Created in partnership with broker-dealer HD Vest, our new column is named after one of the more under-appreciated elements of financial planning -- but just what, you may ask, is tax alpha? It's the value that is added to a client's financial plan by optimizing sound tax strategies. If "alpha" is the return generated by an advisor's skill in picking and managing investments, then "tax alpha" protects that return and generates a boost by making sure that taxes don't eat away more of a client's wealth than absolutely necessary.

We're dedicating this column to tax alpha because accountants who are financial planners are uniquely positioned to deliver it. "Accounting professionals understand very clearly that it's not what a client earns that's important, but what they keep," explained HD Vest president and CEO Roger Ochs. "The after-tax rate of return is the measure that counts for clients -- and advisors with accounting expertise have a distinct advantage in creating strategies to help maximize that measure."

The typical non-CPA financial planner does not prepare the client's tax return and often doesn't even see it, according to recent research conducted by Accounting Today and HD Vest. However, nearly 80 percent of accountants who offer financial planning also prepare their clients' taxes, and so already have firsthand knowledge of their clients' financial position.

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At the same time, accountants bring a level of tax expertise that's hard to beat: The same research showed that CPA financial planners were much more likely than non-CPA planners to discuss new tax developments like those embodied in the American Taxpayer Relief Act or the Affordable Care Act with their clients.

"Clients know that a financial plan built to capture tax alpha has a much greater chance of protecting investment assets and preserving returns than a plan that focuses on investment performance alone," said Ochs. "That, in turn, makes the relationship between the client and the advisor who provides this holistic level of service that much stronger and more durable."

In the coming months, we'll be sharing strategies that you can employ to provide tax alpha to your clients, and for more details, as well as videos, white papers and additional information on the topic, check out the Tax Alpha tab on

For more information about HD Vest Financial Services, visit or contact a Business Development Consultant at (800) 742-7950.

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