I am a member of the Financial Services Institute (FSI); they work as advisor representatives on Capitol Hill to create a healthier regulatory environment and protect Main Street Americas access to financial advice. THIS MEANS YOU!
I don’t know that I’ve ever asked for help to try to change how our systems are working, but I feel there is profound importance at this time to make a small request. For the good of the country and the well-being of its workers and investors, I am joining FSI to urge Congress to restore the tax deductibility of advisory fees. I am asking for your help, too!
Restoring deductibility for advisory fees is a timely and important measure that would drive real benefits for clients during a critical time for our nation.
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Why This Is Important
Unfortunately, in recent years, Americans have encountered an unnecessary roadblock standing between them and the professional guidance they need. In the Tax Cuts and Jobs Act of 2017 (TCJA), Congress repealed the limited tax deductibility for investment and financial planning fees that had made these crucial services more affordable for workers and savers across the country.
With job losses and market volatility causing many Americans to rethink their spending priorities, this repeal has had the unintended consequence of making investment and planning advice more expensive at a time when it is most urgently needed.
In addition to the profound uncertainty we are experiencing today regarding our health, the well-being of our families, and civic unrest, the coronavirus pandemic has created unprecedented volatility in many investors’ financial plans. Even with the ongoing rebound in the equity markets, investors are deeply concerned that the virus and its economic impacts will leave them unprepared for retirement and other goals, despite their years of saving and hard work.
During these challenging times, it is more important than ever that we protect and expand access to financial advice!
What Congress Should Do
As elected officials on both sides of the aisle search for ways to put Americans on more solid financial footing, removing the unnecessary tax burden that currently stands as a barrier between clients and professional financial advice would provide an impactful, common-sense solution.
With this in mind, we ask Congress to restore this crucial deduction as part of any additional emergency relief measures it considers in response to the ongoing pandemic.
However, Congress should not stop there.
The deduction that existed prior to 2017 included a threshold that prevented the deduction from taking effect unless advisory fees exceeded two percent of an investor’s adjusted gross income (AGI). This favored upper-income households, who typically pay more fees based on larger portfolios, over middle-income investors. In order to help as many Americans as possible during this difficult time and beyond, Congress should take action to remove this arbitrary AGI threshold.
Together, we can help Americans obtain the affordable, professional financial advice they need during this unprecedented time.
Thank you in advance for your efforts to make a change!