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Dave Alison

Financial Planning > Tax Planning

Tax and Wealth Management Meet in a Growing Sweet Spot

By Jane Wollman Rusoff

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Increasingly, tax planning and tax management are becoming a key focus among many financial advisors. Here’s why, according to Dave Alison:

“If you’re holding yourself out as a holistic advisor, you should be able to advise clients not just on investments and retirement but on taxes,” Alison, founder and president of C2P Enterprises and Alison Wealth Management, argues in an interview with ThinkAdvisor. “Everybody out there is looking for ways they can legally save on taxes.” 

Indeed, the enrolled agent’s biggest differentiator, Alison says, is his advisory’s expertise in tax strategies. He considers that part of fulfilling the fiduciary duty.

A 2023 ThinkAdvisor LUMINARIES award winner for Thought Leadership and Education, Alison, 39, trains and educates other financial advisors under his C2P holding company, which has four entities, including Prosperity Capital Advisors, Clarity to Prosperity and Clarity Insurance Marketing.

C2P’s assets under management total $2.5 billion, with Alison Wealth managing $130 million in assets of high-net-worth and ultra-high-net-worth clients.

In the interview, the certified financial planner reveals his growth strategies for both the advisory and C2P, the latter based in Cleveland. 

A strong emphasis for both is tax planning and management. At Alison Wealth, which is based in Palo Alto, California, and also has offices in Charleston, South Carolina, and Marietta, Georgia, that serves to generate referrals.

In expansion mode, C2P is adding six to 10 new offices annually.

In the phone interview with Alison, who also finds time to host the podcasts “The Bucket Plan On-Demand” and “Complete Wealth Management,” he discusses educating entrepreneurial financial advisors on how to bring “under one roof” financial planning, asset management, tax management, protection planning and legacy planning.

Here are highlights of our conversation:

THINKADVISOR: Tax management is one of your firm’s key differentiators. Why is that important?

DAVE ALISON: Our big philosophy and underpinning for working with clients is: “It’s not just about what you make — it’s about what you keep.”

If you’re truly holding yourself out as a holistic advisor, you should be able to advise clients not just on investments and retirement but on taxes as well.

 For most people, taxes are their single largest expense.

Is having expertise about taxes why you became an enrolled agent?

A lot of the work we do for our higher-net-worth clients is very heavy into tax planning and tax management. Everybody out there is looking for ways they can legally save on taxes.

That’s a big part of our differentiator: We’re not only investment advisors but also tax experts.

At Alison, we’re all enrolled agents or CPAs in addition to being CFPs.

At C2P, we deliver a lot of advanced tax-management training to the advisors that affiliate with us.

For years, financial advisors weren’t permitted to give clients tax advice. Why was that?

A lot of the traditional broker-dealers prohibited their advisors from providing tax advice because they didn’t want that liability.

Now, a lot of advisors are continuing to expand their knowledge — people like me who have the enrolled agent training and designation.

The industry has gone to more of a holistic, fiduciary approach, and tax planning and tax management have become a bigger part of what we have to deliver to clients in order to uphold our fiduciary duties.

What’s the main growth strategy for your RIA?

Continuing to differentiate ourselves with the advanced tax management that we deliver to our wealth management clients in order to bring in other high-net-worth and ultra-high-net-worth clients.

What growth strategy do you use for C2P?

No. 1 is our holistic financial planning process. No. 2 is teaching advisors how to embrace tax planning and tax management in terms of incorporating that into their business.

And No. 3 concerns the advisors’ career path and compensation.

What are the recent results of your financial advisors expansion thrust?

We’re continuing to expand to more independent practitioners around the country who want to plug into proven processes to help them scale and grow their business.

We’re bringing on about six to 10 new offices per year.

What do advisors need most from you in training and support?

They look to us for thought leadership to make sure they’re staying ahead of the curve in the everchanging, complex landscape of financial services.

And they look to us as a leader in processes and training around holistic wealth management, which is incorporating financial planning with asset management, tax management, protection planning and ultimately legacy planning.

A big part of our differentiator is [educating advisors on] how they can bring all those things under one roof.

What’s your chief strength as a leader?

Being able to unpack really complex or challenging situations to simplify and bring clarity to them.

An example is working with ultra-high-net-worth clients that have very complex financial situations, business entities, goals and objectives, charitable purposes, tax issues.

Whether it’s financial advisors we work with or the end clients, we take a perspective of educating in everything we do.

That enables people to feel more empowered to make the right decisions that are best for them.

How do you educate the C2P advisors?

Being an advisor myself and owner of an advisory firm, I know about the complexities. So we help bring the advisor-entrepreneurs a lot of proven processes and systems so they can build their dream business and provide valuable advice and support to their clients.

About taxes: In one of your videos, you talk about a “Bracket-Bumping Roth Conversion Strategy.” Please explain how that benefits clients. 

It’s using up the capacity in the lower tax brackets from a strategic tax management-planning perspective.

The U.S. tax system is a dynamic pay-as-you-go system. 

So, for instance, if a client is in the 12% bracket, before they get pushed into the 22% bracket, it might be prudent to realize some income in the form of a Roth conversion to fill up that 12% bracket and move some of the money to Roth.

Down the road, if they’re in a higher tax bracket, that money will come out tax-free.

What do you think of the proposed new Labor Department rule that broadens the definition of a fiduciary?

Anybody out there making recommendations or advising on a client’s money or life savings should be held to a fiduciary standard and act in the best interest of the client.

My hope is that [this rule] wouldn’t put too many burdens in place from an operational or procedural standpoint because that hurts smaller investors.

If an advisor has too many compliance hoops they have to jump through, they might continue to raise their minimum.

What’s the biggest challenge to financial advisors today?

Marketing: attracting and continuing to bring new clients to the firm and differentiating themselves.

The first struggle most advisors face is how to market, how to grow their business, how to bring on new clients.

Once they’ve figured out marketing, it’s how to scale the business around them by building out the teams with additional advisors.

So, is that the second-biggest challenge?

Yes — building a team and a business that includes having an advisor career path and compensation structure to be able to go from an individual practitioner to the CEO of their business and have a team of other advisors within their firm.

                        

Jane Wollman Rusoff

@jrusoff2

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