Tax planning letters are some of the most concrete, actionable communications an advisor sends. Unlike broad market updates, a tax planning letter tells the client exactly what they should be thinking about, often with a specific deadline attached. When done well, tax planning letters demonstrate your comprehensive value beyond investment management and position you as a true wealth advisor rather than just a portfolio manager.
Tax planning is year-round, but certain letters have specific seasonal windows:
One of the most high-value tax planning letters an advisor can send is the Roth conversion opportunity letter. This letter is most powerful when sent to clients who have had an income reduction (retirement, job change, sabbatical) and may be in a temporarily low tax bracket. The letter quantifies the conversion opportunity, explains the long-term benefit, and creates urgency around the year-end deadline.
Dear [Client Name],
As we approach the end of [year], I wanted to flag a few time-sensitive tax planning opportunities that apply to your situation.
Tax-Loss Harvesting: Your taxable account currently shows unrealized losses in [positions/asset classes]. We have an opportunity to harvest approximately [estimated $X] in losses before year-end, which can offset gains taken earlier in the year or carry forward to future years.
Roth Conversion Opportunity: Based on your projected income for [year], you are likely to be in the [X%] bracket — potentially lower than your future expected bracket. Converting [estimated $X] to Roth before December 31 could save [estimated $X] in future taxes.
Required Minimum Distribution: [If applicable] Your RMD for [year] is approximately [amount]. Please let me know if you would like to direct any portion to a Qualified Charitable Distribution.
I'd recommend a brief call in [November/early December] to finalize these strategies before the year-end deadline. Can we find 20 minutes?
Warmly,
[Advisor Name]
The most effective tax planning letters include a note about coordinating with the client's CPA or tax preparer. This collaboration signals holistic planning, avoids surprises at tax time, and reinforces your role as the financial planning quarterback. Consider sending a copy of your tax planning letter directly to the client's CPA (with written client authorization) to facilitate the coordination.
RIALetters creates tailored tax planning letters based on each client's specific situation — Roth conversion candidates, tax-loss harvesting opportunities, RMD notifications, and more.
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