The 3 Big CPA Problems Financial Advisors Can Help With

The 3 Big CPA Problems Financial Advisors Can Help With

These scenarios to developing a relationship with the CPA work best if you already have a mutual client with the CPA. It’s the easiest way to connect with them to solve their problems, and start the relationship with a CPA.


From an advisor’s point of view, I’ll sum this up as lack of coordination between tax and investment.

It’s very common for clients to make big financial decisions during the year, and then be surprised come tax time when they find out that they owe more tax than they thought. A lot of times the CPA gets the shaft, because they are the ones that break the bad news to the client.

This is not a great feeling for the CPA, because the client ties the negative results directly to the CPA!  And what is the CPA thinking is “How am I supposed to magically know what you did last year? Why didn’t you or your advisor tell me about this ahead of time? This all could have been avoided.”

If we want to stand out from all the other advisors, we want to create an ongoing relationship with our client’s CPA. When you’re planning for your client throughout the year and there’s a possible event that could affect their taxes (ie, large capital gain/loss, Roth IRA conversion, etc.), we want to make sure we keep the CPA updated.

After getting approval from your client, a simple phone call to the CPA is the best method for starting the conversation. Both the client and the CPA will appreciate this effort to keep all parts of their financial life coordinated. (As you continue to read this post, you’re going to learn exactly what to say to start the conversation with your clients and their CPAs about this issue.)


A normal conversation at a CPA firm with a client during tax season goes like this:

CPA: I see that you had dividends from fund company last year but nothing this year for your taxes, did you get a 1099?

Client: No, I don’t remember getting one.

This will either result in incorrect info on the tax return and a letter from the IRS three months later, or it will hold up the CPA on completing the tax return for a few weeks. Both are an inconvenience for the CPA.

Since you know your client’s financial picture better than the CPA, you can clearly communicate to the CPA the correct answer. It’s very simple, but this one thing gives the CPA the ability to complete a tax return and move onto the next one, which is a big deal to them.

The best way to solve this problem for the CPA is to create a simple list of your client’s accounts. All that’s needed is the name of the custodian, the type of account, the last 3 digits of the account number, and whether the account has a 1099 for the year or not. (Of course, it’s very important that you first get client and compliance approval before communicating and sharing with their the CPA in this way.)

This simple exercise is going to save the CPA a lot of time. As the CPA goes through the client’s tax documents, they can use the list you provided to confirm that they have every 1099 from their client. If something is missing, they can ask you to get them a copy.

I’d recommend trying this out on only 10-20 of your clients. It’s a good way to test the process and make sure your client and CPA are getting benefit from the extra work you’re doing.


This is the most common problem that CPAs face. It usually happens during tax season while the CPA is working on the client’s tax return, and they see a $0 cost basis. They call the client to ask them about it, and the client will have no idea. And then begins a time-consuming process to try and figure out what the basis is. This is also the one thing where clients usually end up paying way more to the government than they have to.

All CPAs want is a number to put on the tax return and be done with it. If you can help them with this in the height of tax season, they’ll love you. They will at least say yes to meeting you for lunch after tax season.

If you were involved in the account throughout and actually have – or can get – the transaction history, calculate the total cost basis of the investment, or at least give the historical purchase details to the CPA, so he/she can get it done quickly.

Alternatively, if there’s no record of basis and you can’t calculate it yourself, try running a Morningstar Hypothetical that works backwards to estimate what the cost basis might have originally been.

If you can work the hypothetical to show a sale price that’s close to the total proceeds on the 1099, based on at least an estimate from the client of when the original purchase may have occurred, you’ll have a pretty good idea of what the cost basis was, and the total amount of dividends reinvested over that time period.

I usually tell the CPA that I’m sending them a hypothetical example and it shouldn’t be shared with the client, but it will provide you with some idea of what the cost basis would be for this example. It may not be perfect, but the CPA can use it to make a reasonable estimate of the cost basis, that is better than just assuming a cost basis of $0… and you save your clients a lot of money by communicating with their CPA on the problem! (Again, make sure to check with your compliance department to ensure this is permissible for you.)

By solving one or more of these 3 problems for a CPA, you’ve instantly been brought to the head of the crowd. You’ve relieved their pain and stress when it’s highest, and they’ll be grateful for your help. And you can turn that positive feeling the CPA has about you into a prospective referral relationship.


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