Tax Planning – We All Need It

By Jonathan Harper on October 17, 2023

When prospects or friends ask how HMA assists and guides clients, their first (and often, only!) thought involves investment management. While investing is an integral piece to holistic management, it is just one cog in the wheel. Tax planning, which is arguably as important a component to comprehensive financial planning as investing, has increasingly become a key focus for our firm. Taxes tend to not be a very exciting topic; they are often something people begrudgingly think about once per year, in April, when annual taxes are normally filed. That said, consistent tax management can make a powerful and positive impact to both a short and long-term financial plan. At HMA, we pride ourselves on collaborating with one’s entire financial professional team – CPAs, attorneys, and advisors. With the right resources in place, clients can feel comfortable that a subject as sophisticated as taxes is adequately handled.  

There are many components to taxes, especially its effect on income, capital gains, and philanthropy. Take, for example, an individual who sells their business for a sizable sum. They are concerned about the tax impact from the transaction — no one wants to write a large check to Uncle Sam – and are worried about how they can replace their lost income. They turn to HMA’s team to help answer their questions and concerns. How can we minimize this year’s tax burden? How can we tax-efficiently reinvest proceeds? How can we fulfill philanthropic goals while also reducing taxes? There are many strategies to talk through between the client and their financial team members to determine which options suit them best. We often find that the right solutions to these questions generate meaningful tax savings and increase investment returns over time. While this is just one broad example, anyone who participates in the tax planning process can better understand their current picture and if possible, improve their state of affairs.   

For us, getting hold of client tax returns is akin to a doctor receiving a full inventory of your medical history. It is imperative that we, as fiduciaries, understand the entire financial picture before introducing appropriate recommendations. A year ago, we expanded our toolbox and implemented new tax planning software, Holistiplan. This advanced platform analyzes a tax return, illustrates annual tax bracket estimates, and provides opportunities to optimize a situation. Together with our financial planning software, eMoney, we are able to accurately portray how changes influence an ongoing plan. However, we cannot just rely on technology to solve all problems. While the technology is helpful, being able to depend on a team of experienced and creative Certified Financial Planners, who know each client’s individual dilemma, can make the biggest difference.

At HMA, we strive to ensure our clients maintain the greatest level of wealth on an after-tax basis, year-over-year. With year-end around the corner, we welcome a discussion to determine how we can help improve your current circumstances before we turn the page to 2024. Reducing your tax pay, that’s HMA!