Many Americans are plenty confused by the implications of recent tax regulation, according to a recent study conducted by the Million Dollar Round Table (MDRT).
As a result, consumers have an increased need to turn to financial advisors who can provide a holistic approach to help clients better understand changes and create strategic and protective financial plans.
The Tax Cuts and Jobs Act, passed by Congress and signed into law by President Trump last December, was the most sweeping rewrite of the tax code in more than 30 years. Among the bill’s many reforms were a doubling of the exemption for the estate tax, meaning estates up to $11.2 million are exempt from federal estate tax.
Forty-two percent of respondents in the new MDRT survey indicate they are not at all comfortable explaining the reform’s implications to others, while another 13% say they haven’t even heard of the reform. Although changes to the law will affect returns filed next year, 39% of respondents mistakenly believe returns filed this year will be impacted. Eighteen percent anticipate a positive impact and 21% expect a negative impact, although, in reality, the impact will be felt next year.
“Major updates to tax laws are a once-in-a-generation change that will have a direct and lasting impact on consumers’ financial future,” said James D. Pittman, CLU, CFP, MDRT President. “Clients should look to advisors for guidance and tactics to successfully navigate these changes. Methods to reduce pre-tax income or invest tax returns can make a substantial impact on wealth and retirement throughout the course of their career.”
One-third (33%) of survey respondents who work with financial advisors said one of the reasons they hired an advisor in the first place was to help file taxes. Almost three-in-four (72%) who currently work with an advisor say it is extremely likely or very likely they will work with their financial advisor to help file taxes in 2018. Despite this interest, less than half of respondents’ say their advisor proactively reached out with advice about the tax reform this year.
About MDRT: Founded in 1927, the Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is a global, independent association of more than 62,000 of the world’s leading life insurance and financial services professionals from more than 500 companies in 69 nations and territories. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of excellence in the life insurance and financial services business. For more information, please visit mdrt.org and follow on Twitter @MDRtweet.
