Tax Season Drives Investors to Focus on Financial Planning and Wealth Management

Connecting tax-planning and financial planning

– 46 percent of investors focus on their overall wealth and financial situation when preparing taxes
– 41 percent of investors with a financial plan are “extremely confident” when preparing their taxes, compared to 25 percent without a plan
– More than half (59 percent) of investors expect to receive a federal tax refund this year

March 30, 2016 — SAN FRANCISCO–(BUSINESS WIRE)–Nearly half of U.S. investors take advantage of tax season to address their broader wealth and financial situation, according to a recent Charles Schwab survey of more than 1,000 investors.

Forty-six percent of investors surveyed approach tax time with their total financial situation in mind, and 40 percent say they review their overall financial plan coincident with tax preparation.

Many investors approach tax planning and financial planning as connected activities – 47 percent say they believe the two are one and the same, and 44 percent say tax planning plays a “major” role in how they invest and manage their wealth over time. Among affluent investors with $250,000 or more in assets, even more (50 percent) say tax planning plays a major role in informing their wealth plan.

“Active engagement in the investing process can make a big difference when it comes to achieving financial goals, and tax season provides an invaluable opportunity for people to think holistically about investing and financial planning,” says Joe Vietri, senior vice president and head of Charles Schwab’s retail branch network. “Tax season is a time of year when people have all their financial information top of mind, so it’s the ideal time to pay attention to broader financial goals and plot how you plan to get there.”

Financial planning boosts confidence

Forty percent of all survey respondents have a written financial plan, and among those with a plan, 52 percent say tax planning is a specific component of their plan. The survey reveals that those with a financial plan are more likely to consider their total financial situation during tax season and more confident in preparing their taxes:

  • 50 percent with a plan treat tax time as an opportunity to address their overall financial situation, compared to 31 percent who don’t have a plan.
  • 41 percent with a financial plan feel “extremely confident” in preparing their taxes compared to 25 percent who don’t have a plan.
  • Among investors who incorporate tax planning into their financial plan, nearly half (48 percent) feel “extremely confident” as they prepare their taxes.

The survey shows that working with a financial professional also drives confidence for investors come tax time. Among the 59 percent of survey respondents who use a financial advisor to help them with their investments:

Although tax efficiency can be a key factor in estate planning, only 19 percent of investors take the opportunity to develop or assess estate plans when reviewing their tax documents for filing

  • 42 percent are “extremely confident” in preparing their taxes, compared to 31 percent who don’t use an advisor.
  • 66 percent with an advisor believe they’re doing all they can to reduce the tax impact of saving and investing, compared to 48 percent without an advisor.

“Having a plan or getting advice has a positive impact on investors’ confidence, both in the short term on topics like annual tax planning, but also when it comes to longer term goals like saving for retirement,” says Vietri. “Even beyond the findings of this survey, we’ve definitely witnessed that our clients who have a financial plan or receive some form of professional advice feel more confident making financial decisions and more secure about reaching their goals.”

Room for improvement

According to the survey, there’s also room for improvement when it comes to investors’ approach to tax planning. Over the course of the year, just 29 percent of those surveyed pay attention to the impact of taxes in their investment portfolios; only 15 percent use tax loss harvesting to minimize the impact of investment-related taxes; and just 21 percent include charitable contributions as part of a tax planning strategy.

Although tax efficiency can be a key factor in estate planning, only 19 percent of investors take the opportunity to develop or assess estate plans when reviewing their tax documents for filing.

“Tax planning shouldn’t just be a seasonal activity for investors,” notes Vietri. “Taxes can have a significant impact on portfolio returns, which affects progress toward achieving long-term goals, so it should really be an ongoing focus.”

Most investors expecting a refund plan to save it

Fifty-nine percent of survey respondents expect to receive a federal tax refund this year. Of those:

  • 49 percent plan to use their refund to save
  • 34 percent will pay off debt
  • 27 percent will invest
  • 23 percent say they will buy something special for themselves or someone else

Of those who plan to invest their refund, nearly half (49 percent) say they’re most likely to invest in equities (stocks, mutual funds or exchange-traded funds), 16 percent in bonds or CDs, and eight percent will hold their refund as cash in their portfolio.

Approximately two-thirds of investors surveyed use at least one tax-advantaged retirement account. Sixty-five percent have one or more individual retirement accounts (IRAs), and 63 percent have one or more 401(k) accounts.




About the survey
Koski Research reached out to 1,066 general investors using a third-party online panel. Participants were screened to ensure they had minimum investable assets of $50,000. The dates of interviewing were from February 16-18, 2016. The margin of error for the total survey sample is three percentage points.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity. More information is available at Follow us on Twitter, Facebook, YouTube and LinkedIn.
Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. Koski Research is not affiliated with the Charles Schwab Corporation or its affiliates. More information is available at and