Every new client brings a little history when they first sit down with their advisor. For some, it’s the haphazard collection of assets they accumulated on their own; for others, a full-fledged financial plan with a portfolio, asset allocations, estate documents and more. Whatever the case may be, the first thing an advisor often needs to do is go through that history and clean up any mistakes that may trip the client up going forward.

Tax-savvy financial advisors -- particularly those who find new clients through tax preparation -- will often note that clients come to them with tax issues. “The most common problem I run across is tax-inefficient portfolios,” said Steven Wilson, founder of Steven L. Wilson & Associates CPAs, in Tulsa, Okla., who has been an advisor with HD Vest Investment ServicesSM since 1994. “I often pick up accounts where the allocation being used is appropriate for a taxable account for a high-income individual, but is being used in either a tax-deferred account or is used in a taxable account for an individual paying little or no tax. A related problem we run into is lack of tax planning for withdrawals.”

Echoing that sentiment was Brian Stephens, of Davis & Associates CPA Firm, a Baytown, TX, CPA firm that have been in an advisor with HD Vest Investment ServicesSM for 21 years with HD Vest. He has placed the blame squarely on clients’ previous planners: “Advisors do not take tax considerations into account when making recommendations to clients or building client investment portfolios.”

Sometimes the problems that advisors need to fix for new clients involve, well, almost everything, according to Matthew White, the founder of M. White Financial Services in Baytown, Texas. An HD Vest advisor since 2000, he offered a litany of common problems he sees, including:

*A lack of coordination between tax, investment, protection and legacy planning.

*Registration or beneficiary designations are not coordinated with estate planning.

*Portfolio construction that is more aggressive than the client’s risk score.

Those weren’t the only issues White identified, however -- but the others point to a broader problem with how much and how well clients are involved in their own planning.


It starts with the client struggling to be a participant in the planning process, White explained: “They can’t imagine why we are asking so many questions.”

In addition, they often don’t know what they own or understand their investment allocation, he added: “Most clients think of investment planning as a single element in a vacuum. Generally, we spend most of our time with new clients educating them about the process and getting them to share details with us. Our goal is for the client to become an active participant with us in the journey.”

One clear sign of a client who hasn’t been active in their planning is the person who arrives at their new advisor’s desk with a plan or a portfolio that doesn’t suit their financial situation, their priorities, or their risk tolerance.

“Investment philosophies or presuppositions about the client's belief structure in investments” are a common problem that Kurtis Campbell, a partner at Dayton, Ohio-based Brown & Campbell CPAs Inc., which has been offering financial services since 2009 with HD Vest, has to fix.

Similarly, Charlene Wehring, founder of Wehring Wealth Management, LLC in Bellville, Texas, an HD Vest advisor since 1997, noted, “The most common problem that I see when the clients are transferring their accounts is that they have investments that are not suitable for their goals or they have no understanding of how their money is being handled. We take time to educate and familiarize our clients with the steps we are taking to meet their goals and how their assets are being invested to accomplish this.”

That mention of client goals highlights a greater problem that may lie behind many of the planning mistakes clients bring with them. “One of the biggest concerns we identify is the client not having a goals-based plan. Most often, the meetings with their existing advisors revolve around performance and investments,” explained Lisa Pugel, president of D.B. Tax and Financial Services Inc. in South Milwaukee, Wis., and an HD Vest advisor since 1995.

Taking the time to build a comprehensive, proactive plan for reaching the client’s desired future will naturally help identify the concrete steps they and their advisor need to take next -- and will also help pinpoint specific missteps they’ve made in the past, she explained: “Once we determine actual goals and objectives, we often find the client’s diversification and risk tolerance doesn't match up.”

For more information about HD Vest Financial Services and how they can help you transfer a client’s wealth, visit hdvest.com/join or contact a Business Development Consultant at (800) 742-7950.

HD Vest Financial Services® and its affiliates (collectively, “H.D. Vest, Inc.”) do not provide tax or accounting services. You should consult your tax professional regarding the tax implications of any investments. The views and opinions presented in this article are those of the advisors quoted, and not of HD Vest Financial Services® or its subsidiaries.Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name. Securities offered through HD Vest Investment ServicesSM, Member SIPC, Advisory services offered through HD Vest Advisory ServicesSM, 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.