By: John P. Napolitano, CFP®, CPA, PFS, MST

By this time of year, most Certified Public Accounting (CPA) firms have a good handle on what their clients’ 2020 tax picture will look like.

And with 2020 being what it is, the year-end meetings occurring this year have the opportunity to shed light on many issues well beyond the issue of tax planning. The reality of what happened this year may have caused your client to think differently about a lot of things. Work, the business, where they live, what they do and where they want to go are now different than many expected merely year ago. As a CPA, we’ve seen this play before. No, not a pandemic, but we have seen financial disaster and chaos in folks’ financial lives. The difference between 2020 and those occasional bad situations, is that in 2020, at least for a while, many feared for their business’ survival.

Here’s the reality, your best clients can get more value out of your firm if you add softer, life planning discussions to your year-end meetings this year. The process for helping clients move through the various phases of life always reveals obstacles and challenges. So beyond this year’s tax planning sessions, add a few financial life planning questions. When meeting a client who has clarity or wants help on how to best enjoy their 168 hours per week, the planning process becomes more meaningful.

Find out what worked, and what didn’t for your clients, financially speaking, in 2020. Business results are all over the map from flat out failure to thriving like never before. Most owners would agree that 2020 has challenged your business continuity plan like none other. Helping clients address their continuity plan as it then relates to their other financial planning needs such as death and taxes, disability or the ultimate desire to throw in the towel and sell the business.

Many have contemplated their own illness or mortality more than usual in 2020. With that said, estate planning attorneys have been very busy and many of your clients have probably updated or renewed their estate planning documents in 2020. Don’t assume that everything was done well in this process. As your clients’ financial planner, you should read and understand those documents and advise whether what was documented is what your client needs. Beyond familiarity with the documents, you should be sure that all titles to assets and beneficiary elections were changed to match the new legal documents.

There is a difference between knowing what the titles and beneficiaries should be and what they are.  Telling your client what they should be usually isn’t enough, you have to do it for them. Even though you may view this as a lot of invested time, it’s worth it in the long run. If your client passed or became incapacitated without these documents fully implemented, you will (and maybe should) look incompetent.

Annual estate reviews become easier if you’ve read the documents and have good documentation regarding the moving parts of the documents. We have created a simple spreadsheet to track what our clients’ estate documents say so that we do not have to re-read the documents each year. We also recommend that you review these moving parts each year with a more detailed estate review as needed or no less than every three years.

The business or employment in general has probably crossed the mind of many clients. Especially the more senior clients and those who realize that they are financially independent, and work is optional.  There are rich conversations to have at this point. Sometimes just asking the questions gets the conversation rolling to the point where action plans begin to form and clarity regarding how your firm can help evolves. Your advice can be invaluable as it relates to retaining the business and empowering management, selling the business or ramping up the business.

Financial modeling will be a big part of helping your client to envision this life. For many entrepreneurs, it’s emotionally difficult when going from a great salary and growing a profitable business to living off of assets. Conceptually, it’s a big struggle for many. When that client can see the financial models, with the various stress tests and assumptions, they may find it easier to let go and move onto living their ideal life without being glued to a business.

As simple as cash flow analysis is to perform, it is tough for many clients to get their arms around today’s spending and what they think spending may look life under ideal conditions. Ideal conditions frequently drive up the cost of living as for many those ideals include travel, family and maybe multiple homes. Here too your firm can become invaluable to help these clients address the financial consequences of their vision for the future.

For the time being, the trend in terms of where people want to be is a moving target. And it moved at a speed that no one could have predicted. Cities were gutted and people flocked to the burbs and to remote areas in record numbers. How does your client feel about that? You may be surprised to hear their thoughts. Some will want to look for distressed opportunities in major urban areas betting on a comeback, some are accelerating their plans to re-locate to a warm, tax free climates and some are adding on to their home to own a permanent staycation home. To that end, helping your client plan that real estate transition may be helpful on all fronts from tax planning to cash flow planning.

Clients may benefit from your hands on guidance regarding domicile planning. Depending on the state where your client lives, this may be a great service to offer. High tax states vigilantly audit domicile, and clients should be prepared in advance for what that battle looks like in case their number comes up.

The year-end review as it relates to interest rates also reveals some new twists. For those with debt, the opportunity to lock in fixed record low rates is still alive. Many forecasters also believe that these rates may stay relatively low for a while. On the debt side, banks are looking for new clients and many of your clients can also look into refinancing their corporate and commercial real estate loans. To you and me, this may seem fundamental. Remember this, your client is very busy doing what they do and may simply not follow it or realize the opportunity.

It’s a great time to discuss intra-family transfers. The AFR can hardly get any lower. This is also a good time to consider a long term charitable strategy. It’s fair to say that any leveraged planning opportunity today is going to look a lot better than it does with higher interest rates. The progressive planner will bring these to the attention of their client now and not wait because of a long term forecast for low rates.

The other side of low rates is for savers and investors. Savers, as in CD and bank account holders aren’t happy. They shouldn’t be happy with their current yields, but they can hopefully find comfort in knowing that they will not lose value. I’m surprised, however, to find many large clients in money market funds paying literally nothing. A simple recommendation to another institution and we have witnessed many clients go from nothing to something with their cash assets. Your largest clients really appreciate learning where they can earn an additional 50 basis points on their most conservative assets.

As an investor, however, where you may lose principal in fixed income investments your client may not understand the potential risk. If they went reaching for yield in very low quality debt or went very long on the yield curve, they may not understand that their investment can go down in value.

A similar conversation can be had on the merits of municipal investing versus taxable debt. This isn’t a cut and dry conversation. It is based on each client’s individual tax bracket and current interest rates, and that situation may change year to year. For clients who invest in these typically conservative assets classes, their purchases are sometimes a buy and hold until maturity basis, where a deeper conversation may benefit some of your clients.

While many of the topics to discuss in this year-end review are the same as you would otherwise, this year your clients may be a little more open to going deeper with you. Let’s face it, the numbers part of the planning is the easy part with all of the great technology we have today. Most firms don’t have deeper conversations with their clients because they think it takes too long. But for those who do, their client relationships tend to be more valuable and are less frequently challenged from a value perspective.




John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific tax issues with a qualified tax or legal advisor.

John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200. 1-05080220 (Dec 2020)