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How financial planners can legally provide tax guidance

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10 months ago

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Certified financial planners command a lot of knowledge about taxes, but many of them could be afraid of crossing into professional areas that are outside of their field of qualified expertise.

Planning and direct needs like return preparation and advice with precise calculations must remain detached for advisors who are not also certified public accountants, enrolled agents or other tax professionals. But planners can, nonetheless, guide clients on a lot of strategies to lower payments to Uncle Sam, according to a presentation by Megan Brinsfield, president of Motley Fool Wealth Management, the registered investment advisory arm of investing website The Motley Fool, at the CFP Board Connections Conference in Chicago. 

She began her tutorial on legally integrating tax education into advisory practices with lines of verse based on the prologue of “Romeo and Juliet” about the “pair of star-crossed lovers” from two rival families.

“Two households, both alike in dignity, in fair finance, where we lay our scene, from ancient grudge twixt tax and planning arts were separate paths to keep them long apart, but, joined together, make clients’ fortunes whole,” Brinsfield said. “But what if these two arts could join as one? What wealth preserved, what peace of mind begot for clients’ joy and planners’ practice strong when tax and planning dance their destined song? The wisest fool knows this eternal truth: that plans unwed from tax are plans forsooth, that leave upon the table gold untold.”

Translating from her riffing on the classic lines of Shakespeare, Brinsfield said she would provide the planners in attendance with “background about knowing the boundaries, what’s advice, what’s guidance, what’s inbounds or out of bounds” and six ways to “become a tax superhero” without breaching those lines. Despite the lines of professional demarcation between financial advisors and CPAs or EAs, any CFP has obtained and maintained a designation with an exam that devotes 14% of its material to tax planning, which is one of the eight principal topics of the test. Some CFPs also have tax credentials as well.

“Clearly, we need to know about taxes to be effective in our role as advisors and planners,” Brinsfield said. “But how do we differentiate between the things that are guidance or the things that can get us, maybe, into a little deep water with advice?”

The simplicity of the distinctions that she explained belied some recent findings from studies by research and consulting firm Cerulli Associates that only 47% of advisors say they do tax planning, and wealth and asset management firms are bulking up their tax-focused capabilities. Some advisors may be performing aspects of tax planning without knowing it or avoiding the topic entirely without reason.

READ MORE: An overlooked charitable IRA tool steps into the spotlight

Permissible and impermissible tax advice

Topics of discussion accessible to any CFP include scenario analysis from planning tools forecasting the impact of a Roth conversion, a qualified charitable deduction or a retirement withdrawal strategy, the tax status of various account types and the consolidation of them and education of a client about loss harvesting or charitable donations.

“All the lawyers love to see us use qualifying language around anything related to tax,” Brinsfield said. “We often have in the disclosure of our emails that, ‘This is not tax advice. Consult your tax preparer, tax advisor for pretty much everything we say,’ and we often like to include words like ‘generally,’ and, ‘This is an estimate,’ and ‘approximate results.’ Using rounded figures always helps. If you are presenting a figure that’s down to the dollar or starts including cents, it gives the air of precision. And that starts, kind of, crossing over that line into advice.”

In that regard, words like “I recommend” or “let’s move forward” attached to specific numbers or assurances of particular outcomes about, say, the level of a refund or an interest calculation could also fall on the wrong side of that line, she said. And preparing IRS forms or “signing tax returns without the appropriate credentialing” usually end up there as well, she added. Then she invited the audience to participate in a few examples of “impermissible tax advice” versus “permissible tax guidance.” 

The calculation of a required minimum distribution and federal and state withholding percentages was out of bounds, but helping a client carry out a backdoor Roth conversion and reminding them to file Form 8606 was within the boundary line. Fielding a question on investing the profit from the sale of a home by instructing the client to confirm with their tax professional how much to keep for future taxes was kosher as well. 

But promising a client they won’t be subject to a penalty for failing to take a required minimum distribution would likely prove problematic. And the same is true for answering a query about a $10,000 charitable donation “with certainty that something will be a deduction, whereas it could be a deduction,” she said. That doesn’t mean that planners must respond without any numbers at all, though. They might suggest to the client that there could be savings between $3,000 to $4,000, if they itemize.

“In this case, you are in good graces because you have used the words, ‘could provide’ instead of ‘will provide,'” Brinsfield said. “You’ve provided an estimate, and you’ve included assumptions that qualify your statement as well.”

READ MORE: Using tax-aware long-short vehicles to track down alpha

The tax planning opportunity for financial advisors

If planners stick to those general boundary lines, they can assist clients who would value their guidance or education through at least a half dozen important methods. Those cited by Brinsfield were: collaboration with a tax pro, offering clarity in basic English for often complex topics, exploring how to cut their payments to Uncle Sam or maximize their federal refunds, thinking through the impact of state-level duties and giving insights into the many strategies involving spouses.

For any advisors wondering how clients might greet those topics and tools, Brinsfield shared some anonymous quotes from clients and prospects of her firm who were asked how they like their tax preparers. They responded by saying things like, “‘does not know anything, does not provide advice, doesn’t do much planning, does not strategize, not very happy with him. I’ve been ghosted for months. Never been particularly helpful, and getting worse,'” she said. 

“‘Yeah, I’ve got a tax person. But, I mean, how smart is he? I don’t know. I trust the guy to an extent, but I would never say that he is the smartest tax person,'” Brinsfield added, to laughter. “So, as CFP professionals, I think we should all say to tax preparers, ‘Thank you for setting the bar so low. You have made it easy for us to add value.'”

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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5 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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Accounting

Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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