Tax Planning Philosophy

Why Tax Planning Is a Key to Financial Planning

At PlanWiser, we believe financial planning is about much more than growing wealth. It is about helping families keep more of what they earn, preserve more of what they build, and make smarter decisions across every stage of life. That is why tax planning is not a separate or annual exercise that begins in March and ends on April 15. Tax planning is one of the foundational pillars of comprehensive financial planning.

After all, every major financial decision has tax consequences. Whether you are deciding when to retire, how to claim Social Security, whether to convert assets to a Roth IRA, how to manage real estate transactions, how to invest taxable assets, when to sell a business, how to pass wealth to the next generation, or how to structure charitable gifts—taxes affect the outcome.

The question is not whether taxes matter. The question is whether they are being planned for proactively.

The Return You Keep Matters More Than the Return You Earn

For decades, the wealth management industry has measured success by one primary metric: investment returns.

Markets go up.
Markets go down.
Benchmarks are compared.
Portfolios are ranked.

Investment management is important—and at PlanWiser, we believe in disciplined, evidence-based investing designed to help clients achieve strong long-term returns. But we also believe the industry has spent too much time asking the wrong question.

The better question isn't: "How much did your portfolio earn?"

It's: "How much of that wealth did you actually keep?"

Financial planning researcher William Reichenstein has long argued that investors should think in terms of after-tax wealth, not account balances. His work highlights a reality many investors overlook: $100,000 in a Roth IRA is not the same as $100,000 in a traditional IRA because the future tax obligations are dramatically different.

The same principle applies throughout a financial plan. Two families with identical investment returns can experience very different outcomes depending on how effectively they manage taxes.

The Hidden Cost of Taxes

A study by Columbia University professor Andrew Ang examined the impact of federal taxes on stock market investors over the past century. His findings were striking.

After simulating a taxable investor owning the broad U.S. stock market from 1926 through 2025, Ang found that federal taxes reduced long-term equity wealth by more than one-third across different 30-year periods. Ang states his conclusion clearly. "Federal taxes alone consume roughly one-third of the nominal pre-tax return before state taxes, fees, or inflation."

For many families, taxes represent one of the largest ongoing expenses they will ever face. Yet they often receive far less attention than investment performance.

Advisor Value Often Comes from Tax Planning

Research from Vanguard has reached a similar conclusion. In its well-known "Advisor's Alpha" framework, Vanguard identified tax-efficient investing, asset location, withdrawal sequencing, and other tax-sensitive strategies as meaningful contributors to advisor value.

Morningstar researchers David Blanchett and Paul Kaplan reached a comparable conclusion in their groundbreaking research on "Gamma." Their work demonstrated that many of the most valuable planning decisions have little to do with selecting investments and much more to do with optimizing financial decisions, including:

• Tax-efficient withdrawal strategies

• Roth conversion planning

• Social Security coordination

• Real estate transaction optimization

• Asset location decisions

• Retirement income sequencing

In other words, financial planning value often comes not from beating the market but from making better decisions around taxes, retirement income, and wealth preservation.

Taxes Affect Every Stage of Life

Tax planning is not just a retirement strategy.

Every stage presents opportunities to reduce taxes, improve cash flow, and increase long-term after-tax wealth.