QUESTION:
My Financial Planner says that tax guys shouldn't advise about investment; it is too complicated and is a full time job. He doesn't do taxes. Why do you think a tax guy can be qualified to do both?
ANSWER:
Personally I have been doing both for 30 years, My masters degree in wealth management took six years to earn. I didn't just decide to "get into" it. Chances are very good your planner has far less time, experience and education in investment management than I do. He probably does however have better sales closing skills. This is why I teach and write - many good technicians are often not accomplished salesmen. We hope you will find our presentations or website educational and interesting enough so that you will realize there is a better way than calling on a commission-dependent financial salesman, - or high cost fee based adviser at a maga-mutual fund or brokerage firm who may be skimming your account at both the fee and the commission end.
Investments have tax implications
Most investments have some kind of tax implication. To understand them is critical to portfolio management and properly balancing allocations. Because your financial planner doesn't understand taxes, he prefers to promote the idea that a tax guy can't understand investments. His lack of tax knowledge is a disadvantage to him. To suggest that investment is too complex an area for anyone to understand when also involved in another related field helps his case.
Because most salesman financial planners don't understand taxes to the level we do, they tend to argue that tax knowledge is a disadvantage to investment planning. They are hoping this ludicrous reasoning will have the effect of miraculously transforming their own glaring inadequacy into the appearance of an educational advantage.
This is an absurd conclusion based on false premises.
Both disciplines are mathematically analytical
Taxation and investment management are both analytical, mathematic disciplines, the same side of the brain. They compliment each other like fine wine and cheese. It only makes sense that most advisers with a strong tax background could understand investment to a deeper degree than "financial planners" and stock brokers who don't have such. We are more easily able to see the mathematical details. Like the expert who knows which wines to serve with what food, tax guys who have studied investment have a better idea about which investment to place where for tax minimization and portfolio balance to try to obtain your greatest net benefitt.
Financial Planning on the other hand is mostly sales. Analytical acumen is not as critical as sales closing ability. Many financial planners take a short training program consisting primarily of sales but also some basic financial planning strategies and terminology. They then are sent out to solicit investments.
So - contrary to the argument proposed by tax-ignorant financial planners, we would strongly suggest that any investment planner who doesn't understand taxes is less competent than one who does. Not the reverse.