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Learn MoreAdvisors know taxes can significantly impact client outcomes, but many hesitate to start tax-related conversations because they don’t want to cross into tax advice. The result? Valuable planning opportunities often go unexplored, leaving clients without a clear understanding of how taxes may affect their long-term goals.
The good news is that delivering tax alpha doesn’t require interpreting tax law or acting as a CPA. Instead, it comes from helping clients make smarter, more tax-aware financial decisions that can reduce tax drag and preserve more of their wealth over time.
What is tax alpha? Tax alpha refers to the additional value advisors can create by helping clients improve after-tax outcomes through proactive planning decisions. Rather than focusing solely on investment returns, tax alpha focuses on helping clients keep more of what they earn through tax-efficient strategies, informed planning conversations, and coordinated implementation.
Consider a high-net-worth client approaching retirement who needs to determine where to draw income from first. The client is evaluating their options, is unsure about the potential tax implications, and is worried about making the wrong decision.
Rather than offering tax advice, the advisor uses planning technology to:
This approach mirrors the experience highlighted in our case study, Helping Clients Navigate Complex Tax Planning Strategies, which shows how My Financial Coach uses eMoney tax planning, cash flow analysis, and scenario modeling capabilities to help physicians, dentists, and other high-net-worth clients better understand the long-term impact of tax-related decisions and feel more confident moving forward.
The result isn’t just better planning. It’s greater client clarity, stronger engagement, and more informed decision-making.
1. Educate
Help clients understand how taxes affect retirement income, investment gains, and withdrawal decisions.
Tip: Focus on helping clients understand the rules and tradeoffs, not interpreting tax law.
2. Illustrate
Show clients the potential impact of different decisions through planning scenarios and visual modeling.
Tip: When clients can see side-by-side outcomes with Plan Comparison, conversations become more productive, and decisions become more intentional. Behavioral challenges often prevent clients from acting, even when opportunities are clear. Our guide, Helping Clients Overcome Behavioral Barriers and Improve Tax Outcomes, explores how advisors can use visual planning tools, scenario modeling, automation, and empathetic communication to help clients overcome common obstacles such as procrastination, loss aversion, and fear of making mistakes.
3. Coordinate
Bring tax professionals into the conversation when implementation or tax-specific guidance is needed.
Tip: Sharing planning scenarios and modeled outcomes with a client’s CPA helps create a more seamless client experience while reinforcing your role as the coordinator of their broader financial strategy. Here’s how to add an Alliance Partner in eMoney.
Together, these three actions provide a repeatable framework for delivering tax alpha while remaining firmly within compliance boundaries. For a deeper look at how advisors can create value while staying within their role, read How to Deliver Tax Value Without Crossing the Line, which explores the three pillars of tax alpha: educate, illustrate, and coordinate.
Tax alpha doesn’t have to feel overwhelming. Start by identifying opportunities where clients could benefit from greater tax awareness, model potential outcomes, and collaborate with the appropriate professionals when needed.
For advisors looking for a structured approach, this 30-Day Tax Alpha Action Plan provides a four-week framework to help you identify opportunities, model scenarios, engage clients in meaningful conversations, and implement planning strategies with confidence.
Whether you’re educating clients, illustrating tradeoffs, or coordinating with tax professionals, the goal remains the same: helping clients make more informed decisions and keep more of what they’ve worked hard to earn.
More of an Experiential Learner?
Tax planning can do more than help clients keep more of what they earn. It can transform the quality of your review meetings. Instead of spending the entire conversation looking in the rearview mirror, you can use tax-focused planning scenarios to help clients explore future decisions, understand tradeoffs, and gain confidence in their next steps. That’s a theme we’ll explore in our upcoming webinar, The Modern Review Meeting: From Looking Back to Planning Forward taking place Tuesday, August 25, 2:00 p.m. – 3:00 p.m. ET. After all, the question most clients really want answered isn’t, “how did I do?” , it’s “am I still on track, and what should I do next?” Tax alpha can be a powerful way to help clients find that answer.
This webinar replay,Unlocking Tax Alpha: 4 Ways to Boost Client Returns, teaches how to confidently frame tax discussions, collaborate effectively with CPAs, and use tax planning to deepen client relationships and demonstrate ongoing value.
Finally, this short podcast episode, Tax Alpha Week: Mastering Smart Planning with Joe Buhrmann, an eMoney Advisory Financial Planning Practice Management Consultant, explains how effective tax planning can be a powerful value-add for your practice and how to connect with eMoney experts about tax alpha.
