Sitting down over taxes presents the ultimate opportunity to develop a deeper relationship with a client, since the tax return is a window into their financial life. Moreover, as the tax preparer, you've already established a position of trust.

"Not every tax return client will be a strong prospect for financial services," noted Chad Smith, a wealth management strategist at broker-dealer HD Vest Financial Services®. "The good news is you already have access to enough information to enable you to decide whether the person or couple fits the profile of the kind of financial services client you are trying to gain."

And if you do think they're a good fit, then the tax return puts you in a great position to understand the client's complete financial situation, Smith said.

Naturally, W-2s, 1099s, K-1s and Schedule C supporting documentation tell you what a client is earning. They also can give you insights into how much wealth is there to work with. Equally important, they also can reveal major financial planning gaps and opportunities that you can point out.

For example, Line 8a of the Form 1040, where taxable interest is reported, might lead to a question about whether too much of that interest is coming from bank deposit accounts yielding practically nothing, when higher-yielding alternatives might be a better choice.

Looking at dividend income reported on Lines 9a and 9b may raise questions about whether the taxpayer has too much money in taxable investment accounts, and open up a discussion about the potential to take greater advantage of qualified retirement plans.

Meanwhile, knowing whether the client has children (as revealed in exemption claims) may point to the need for college planning and more life insurance.

Noticing that a client has two W-2s for the year may reveal that they changed jobs, and open the door to an IRA roll-over opportunity.

There are still other tax return items that can help you open up a financial planning discussion:

  • Tax-exempt interest: If this is substantial, you can check it against the client's tax bracket to see if they would come out ahead of what they might receive after tax from a taxable bond.
  • Schedule C: Is the taxpayer taking advantage of opportunities to create a qualified retirement plan?
  • Capital gains and losses: For clients with significant capital gains activity, there is an opportunity to discuss tax-efficient portfolio management strategies.
  • IRA distributions: If the client is taking them prematurely, that's cause for a serious discussion of retirement planning. Distributions may also point to the need for a conversation about required minimum distributions, or retirement cash flow management.

"By asking clients about these issues, you are also telling them, 'I can help you with these things,'" Smith said. Rather than pushing your services, posing such questions "is the ultimate form of 'pull' marketing, because it pulls the client closer to you," he concluded.
For a deep look at the opportunities available in a Schedule C, see our 60 Seconds Smarter video under the Tax Alpha tab on

The views and opinions presented in this article are those of Chad Smith and not of HD Vest Financial Services or its subsidiaries.

For more information about HD Vest Financial Services and how they can help you transfer a client’s wealth, visit or contact a Business Development Consultant at (800) 742-7950.HD Vest Financial Services® and its affiliates (collectively, “H.D. Vest, Inc.”) do not provide tax or accounting services. You should consult your tax professional regarding the tax implications of any investments.


The views and opinions presented in this article are those of Chad Smith and not of HD Vest Financial Services® or its subsidiaries.


HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name.  
Securities offered through HD Vest Investment ServicesSM, Member SIPC, Advisory services offered through  
HD Vest Advisory ServicesSM, 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.

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