A group of prominent financial services associations is urging Congress to restore—and expand—the deductibility of professional investment and financial planning advice.
Doing so, the organizations said in an April 6 statement, is crucial to helping Americans access a service they desperately need to “help them survive, emotionally and financially, during the economic crisis spawned by the coronavirus pandemic.”
The Investment Adviser Association (IAA), Certified Financial Planner Board of Standards (CFP Board), the Financial Services Institute (FSI), the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA) are calling on lawmakers to restore and expand the deduction, which was repealed in 2017 with enactment of the Tax Cuts and Jobs Act (TCJA).
“The repeal of the deduction may have appeared inconsequential with 2017’s rising stock market, sustained job growth and slowly increasing real wage growth,” said Kevin Keller, CEO of CFP Board. “But in this moment of crisis, millions of Americans, including many near retirement, are watching the money they worked so hard to earn and to save evaporate virtually overnight. It is crucial that they have affordable access to competent, ethical advice now and in the foreseeable future.”
Prior to the 2017 tax law, the deduction was allowed only for taxpayers whose advisory fees exceeded 2% of Adjusted Gross Income (AGI). Many criticized that limitation as unfairly benefitting upper-income households more than middle-income households. The groups are urging that the deduction be restored for investment advisors and financial planners without the 2% threshold.
“Now more than ever, all Americans are in crucial need of professional financial advice from their trusted financial advisor,” said FSI President & CEO Dale Brown. “The advisory fee deduction should be available to all American households, regardless of income, as a matter of tax fairness.”
The five associations had urged Congress to include expanded advisory fee deductibility in the $2.2 trillion CARES Act stimulus package that was signed into law on March 27, but it didn’t make the cut. The coalition is now advocating for inclusion of the measure in the next round of relief legislation (sometimes referred to as “COVID-4”) likely to be considered by Congress.
The financial advice deduction measure is not expected to be included in possible Congressional action this week to commit another $250 billion to replenish the Paycheck Protection Program, which has been overwhelmed by surging demand from small businesses this week.
“Every day, Americans are frightened by the extreme stock market volatility, the deteriorating business environment and the state of their personal household finances,” said NAPFA CEO Geof Brown. “These Main Street investors realize tremendous immediate benefits when they have access to affordable professional financial advice to help them manage their finances. Access to such advice is even more important in these turbulent times.”
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
