A Financial Advisor's Role In Your Tax Picture
If you have a financial advisor, or you're considering one, they should:
Know taxes inside out.
Be actively involved in your tax picture.
Many — if not most — financial advisors are neither. Below, we cover the tax expertise you should demand and the tax-related services your financial advisor should provide.
Tax Expertise
A financial advisor should know the contents of our complete guide to taxes off the top of their head. They should also hold a designation such as the CERTIFIED FINANCIAL PLANNER™ certification, which demonstrates a baseline level of tax expertise.
Tax-Related Services
A financial advisor should handle your tax planning, manage your self-employed retirement account, and help you weigh locums work against W-2 employment. Some financial advisors prepare tax returns; most don't — and that's fine. More on that below.
Tax Planning
If you don't use an accountant, your financial advisor should handle your tax planning: telling you how much tax to pay and when, reviewing a draft of your self-prepared return, and doing a screen-share with you to fix errors before you file.
If you do use an accountant, your financial advisor should work closely with them. Your advisor can still lead your tax planning even if your accountant's role is limited to preparing the return.
Self-Employed Retirement Accounts
If you have locums income, your financial advisor should handle your self-employed retirement account from start to finish. They should:
Compare a SEP IRA and a solo 401(k) for your specific situation.
Select the right account and set it up for you.
Calculate your maximum contribution each year and help you fund it.
Manage the investments in the account, if you want them to.
W-2 vs. 1099 Work
A financial advisor should be able to answer this common question from locums docs:
How much do I need to make per hour with locums work to match what I'd earn at a W-2 job?
We get this one all the time. With locums work, you pay self-employment tax and cover your own benefits (unless you already have benefits through a W-2 job). So you need to earn more per hour with locums than you would at a W-2 job — the real question is how much more.
To answer that, your financial advisor should compare two factors side by side: net cash flow and retirement savings.
Net cash flow is the spendable money that actually lands in your bank account: gross earnings minus taxes, benefits, and retirement contributions. It's not what you make — it's what you keep.
Retirement savings matters too, since you can typically put away more with locums work than with a W-2 job. If a locums gig leaves you with less net cash flow because you're saving more for retirement, that might be exactly the right trade-off for you.
Tax Preparation
Some financial advisors prepare tax returns in-house. Most don't, and instead refer clients to accountants they trust. Either way, your financial advisor should collaborate closely with your accountant so you get coordinated advice and a seamless experience. Your advisor should request a copy of your tax return each year and use it to inform every recommendation they make for you.
Peace of mind matters when it comes to taxes. You want to sleep well at night knowing you're paying the least amount legally required.
Ready to put this into practice? If you're an ER physician or high-income professional looking for straightforward, evidence-based financial guidance, we'd love to connect. Schedule a free intro call with Yahara Wealth Management — no pressure, no sales pitch, just a conversation.
This content is for educational purposes only and does not constitute personalized tax, legal, or investment advice. Please consult a qualified professional regarding your individual situation before making financial decisions.