Enrolled-Agent Credentials Help Advisors Keep Clients

Kevin Thompson, founder and CEO of Fort Worth-based 9I Capital Group, and Andy Panko, founder of Metuchen-based Tenon Financial, are obtaining enrolled-agent credentials to offer in-house tax preparation and tax planning. The enrolled-agent designation requires passing a three-part IRS exam. All paid preparers must also register for a preparer tax identification number, or PTIN.

Clients are requesting more tax help, and both advisors say the EA credential lets them provide clearer tax advice and retain business. Thompson noted, “I’d rather have a sticky client relationship than a referral that’s … here today, gone tomorrow,” and added that tax conversations are integral to financial advice.

Panko described the EA study process as exposure to tax return concepts that affect planning. He completed four or five returns in his first year as an EA and prepared 85 returns last year. “I struggle to not say ‘yes’ when a new advisory client asks me to do their return,” Panko reported, calling the service a strong value-add for clients.

Firms and individual advisors are deciding how to structure tax services. Thompson and Panko maintain separate entities for their advisory and tax practices to limit liability. Keeping two operations can strain small registered investment advisers. Consolidating advisory and tax work can create efficiencies, but it can also broaden regulatory review because the Securities and Exchange Commission or the IRS could access records beyond what an examiner strictly needs.

Advisors also note trade-offs. Tax returns can require several hours when complications arise; Panko estimated up to five hours for complex returns. By comparison, advisors who charge assets-under-management fees typically spend roughly 20 hours per year on a full advisory relationship. Tax preparation often yields lower hourly revenue than advisory work, and advisors say preparing returns keeps them current on the tax code and informs planning.

The tax-practice experience helps advisors anticipate how financial decisions appear on a client’s return. “Tax planning is really just being able to visualize how a financial planning activity or inactivity is going to show up on a client’s tax return,” Panko explained. Royce Kurtz, a wealth manager at Merit Financial Advisors in Madison, says he became an enrolled agent at his firm’s request and that preparing returns helps prevent clients from facing large, unexpected tax bills.

The IRS says most first-time PTIN applicants can obtain a PTIN online in about 15 minutes. Several advisors caution that a PTIN alone does not indicate deep tax expertise. Panko called the low barrier to entry “concerningly low.” Thompson recalled correcting mistakes made by preparers who hold only PTINs: “The stuff that I have seen from these individuals in particular is absolutely insane.”

With more clients seeking tax-aware financial planning, some firms are directing advisors to gain tax credentials so they can offer in-house preparation and align tax strategy with investment decisions. Advisors who become enrolled agents report the work is demanding during tax season but improves their ability to advise clients throughout the year.