Planning

Free financial advice, for the busiest season of your life For households with $100k+ at Betterment, our advisory fee includes complimentary live chat with a licensed financial specialist. Key takeaways Mid-career comes with competing financial priorities, but you don't have to figure out the order alone. Households with $100k or more at Betterment unlock free access to live chat with a licensed financial specialist. Not AI, not a bot—a real person. Higher earners often leave money behind by staying in "default mode.” Use live chat to size up advanced strategies like asset location, backdoor Roth IRAs, and tax-loss harvesting. Transferring investments from outside Betterment can be a simple way to reach $100k and unlock live chat, while also bringing more of your financial life under one roof. If life is one long series of challenges, those in their 30s or 40s are somewhere in the messy middle of it all. Maybe you just bought a house, or you're trying to. Maybe there's a kid on the way, an expensive wedding behind you, and a college fund somewhere on the horizon. Your income is real now, your finances are getting complicated fast, and the old advice ("just max out your IRA") stopped covering it a while ago. The good news? You don't have to untangle everything by yourself. Households with $100k or more at Betterment now have free access to live chat with a licensed financial specialist—someone who can look at your specific situation and help you figure out what to do next. So let's set the table for your first conversation. Too many goals, not enough dollars? You’ve got a lot going on, so much that your cash flow can’t cover everything. Free live chat can help you quickly prioritize and start knocking out money goals. Because the sooner you start, the sooner you can start enjoying the financial freedom that comes with stacking milestones. Here’s a sampling of the life goals we can help you sort through: Buying a home. Whether you're ready to make an offer or still saving for a down payment, a home purchase reshapes your whole financial picture. A $100k Betterment balance not only lets you size up your strategy with the help of a specialist, it can score you a discounted rate on a mortgage. Building (or rebuilding) an emergency fund. Life has a way of getting expensive at the worst moments. Three to six months of accessible cash is the foundation everything else sits on. At the same time, it’s also possible to overdo it. So size up exactly how much cash you need to sleep better at night, and what to do with the rest. Saving for your kid's college. This one isn’t a pass-fail proposition. Saving even a little, especially while your kids are little, can lighten their financial load when college or trade school come knocking. The question is where to save, and how this goal fits against everything else you're juggling. Charitable giving. The great thing about building the foundation for long-term wealth is it empowers you to give with an abundance mindset. And by donating and replacing appreciated shares instead of dollars, you can effectively reset the tax bill on a slice of your taxable investing as an added bonus. Move beyond the basics of investing Once your finances mature a little, you hit a different category of question. Not "Am I saving?" but "Am I set up the right way?" This is where a lot of investors quietly wonder if they're missing something. And often, they are—not because they've done anything wrong, but because default settings don't always age well. A few advanced settings worth exploring include: Asset location (aka Tax Coordination). It's not just what you invest in, it's where you hold it. You may now have a mix of account types (tax-deferred, tax-exempt, and/or taxable), and strategically dividing up your portfolio between them can meaningfully reduce the potential tax drag on your returns over time. Backdoor Roth contributions. Make more money, and the tax benefits of a traditional IRA will quickly phase out. Make a little more, and the same goes for Roth IRAs. But there’s a perfectly legit workaround that high earners use to get money into a Roth anyway. It takes a couple of steps, so live chatting with our team (and a tax advisor) is highly recommended. Tax-loss harvesting. When your taxable investments dip below their initial purchase price, you can jump on the opportunity to “harvest” the theoretical loss and potentially snag similar benefits as tax-deferred accounts. None of these are hacks. They're just what a well-kept portfolio and automated investing can look like once you've moved past the basics. Help has entered the chat If your household has more than $100k at Betterment, you've reached the point where some money questions are worth asking out loud—and you can do exactly that, for free, with a licensed financial specialist via live chat. Not a chatbot. Not an FAQ page. A real human who can act as a sounding board, take a look at how you're set up, and tell you honestly whether anything deserves a second look. Think of it as a gut-check from someone who's seen a lot of portfolios. The kind of conversation where you can ask: Is a backdoor Roth right for me? How can I grow my charitable giving right along with my wealth? Does my particular mix of assets and accounts make sense? If you're already at $100k, you're already in—simply open a new support chat and select “Talk to a financial specialist.” And if you're not quite there, transferring existing investments from external accounts can be a straightforward way to get there. It can mean bringing more of your financial life under one roof, with the fuller picture in view. So consider transferring your investments to Betterment, and get a second set of eyes for your nest egg.

How to course correct when you simply can't stay the course De-risking during market volatility can be costly. Here’s how to do it without breaking the bank. The best course of action during market volatility is often inaction. That’s because selling riskier assets at a loss locks in those losses. It foregoes their potential for future growth, and it might also trigger capital gains taxes in the process. But if taking some sort of action feels necessary, then modestly reducing your overall risk exposure can be a reasonable alternative. Consider dialing down your existing stock allocation by a few percentage points, or lower the costs of recalibrating by using your future deposits instead. Either way, the solution may be the same: sprinkling in more bonds. Consider bonds to calm your investing nerves When people talk about diversification, equities like international stocks get most of the attention. But no less important in the role of managing risk are bonds. These are the loans given to governments and companies by investors, and while they're not completely risk-free (no asset is), the relatively-modest interest they tend to pay out can feel like a windfall when stock values are plunging. They won’t negate all of the volatility of stocks, but they can help smooth things out and preserve capital. This is why all of our recommended allocations include holding at least some bonds. One way to de-risk some of your future investing is with one of our portfolios made up of both stocks and bonds (Core, Value Tilt, etc.). We’ll recommend a risk level based on your goal, but we make it easy to dial up the bond allocation to your preference. Over time, you can slowly finetune things until your collective risk feels right. Or you can let us automatically adjust it based on your target date. We also offer two portfolios comprised entirely of bonds, each one designed for a different use: Target Income built with BlackRock, designed to help you limit market volatility, preserve wealth, and generate income. The Goldman Sachs Tax-Smart Bonds portfolio, designed for high-income individuals seeking a higher after-tax yield compared to a cash account. Don’t forget about the role of cash One of the best ways to mitigate your overall financial risk is by shoring up your emergency fund, which may include a high-yield cash account like our Cash Reserve. Imagine losing your income stream, and how much time you'd want to get back on your feet. A good place to start is 3-6 months' worth of your essential expenses, but your right amount is whatever helps you sleep more soundly at night. Cash Reserve offered by Betterment LLC and requires a Betterment Securities brokerage account. Betterment is not a bank. FDIC insurance provided by Program Banks, subject to certain conditions. Learn more. Steadying the ship during unsteady times As we mentioned up front, right-sizing your risk during downturns isn’t always cheap. But there are ways to minimize the costs. Lowering your risk profile incrementally is one of them, and stretching out your safety net is another. Either way, it’s okay to recalibrate your risk tolerance from time-to-time, and you can do it wisely with Betterment.

Traditional vs. Roth: Should you take your tax break now, or later? Picking up where the standard guidance leaves off There can be endless decisions to make when investing. Chief among them: Whether to save for retirement through a traditional IRA and/or 401(k), or the Roth variety. With traditional accounts, you typically invest with pre-tax money, then pay taxes on withdrawals later in retirement. This lowers your taxes today and frees up more money to invest. With Roth accounts, you contribute money that's already been taxed, then enjoy tax-free withdrawals once you turn 59½, with no required minimum distributions. When it comes to which is better, here’s the advice you’ll often hear: Traditionals make more sense if your current tax bracket is higher than where you expect it to be in retirement. And vice versa with Roths. It's a start, but not always helpful in practice. Tax brackets can be confusing, for one, and nobody knows what they'll look like decades from now. People's incomes also ebb and flow with age, as do their tax brackets. Luckily, data from the U.S. Bureau of Labor Statistics can help us eyeball these shifts and plot out when each account type tends to shine brightest. The upward and downward slopes of spending When we look at American's average spending by age, we see it often peaks in middle age and declines as we approach our traditional retirement years. Connecting the dots, this means that traditional contributions often make more sense during the middle portion of workers’ careers. They’re likely earning and paying more in taxes than they will in retirement, so it makes sense to shift some of that tax obligation to a lower bracket down the road. For those with lower incomes, pairing those tax-deductible deposits with the standard deduction can also help squeeze more of their taxable income into the 12% tax bracket. The next bracket takes a big step up to 22%. As one’s income rises, however, another wrinkle may come into play. The IRA income limit exception If your income grows to a certain point (see the table below), you’ll face one of those so-called “champagne problems”: the tax deductions of a traditional IRA will begin to phase out, meaning it’s Roth or nothing if you want at least a partial tax break. Earn even more, and your Roth access will eventually dry up too, although there’s a handy “backdoor” option that’s worth checking out. A 401(k), as a side note, has no income restrictions for either contribution type. 2026 IRA income limits Traditional IRA* Modified Adjusted Gross Income (MAGI) Roth IRA Modified Adjusted Gross Income (MAGI) Full tax deduction $0-$81,000 (single filers) Full contribution $0-$153,000 (single filers) $0-$129,000 (married filing jointly) $0-$241,999 (married filing jointly) Partial tax deduction $81,001-$90,999 (single filers) Partial contribution $153,001-$167,999 (single filers) $129,001-$148,999 (married filing jointly) $242,000-$251,999 (married filing jointly) No tax deduction** $91,000 and up (single filers) No contribution $168,000 and up (single filers) $149,000 and up (married filing jointly) $252,000 and up (married filing jointly) *If covered by a retirement plan at work **Anyone is eligible to make non-deductible contributions to a traditional IRA See the income limits for more tax filing statuses Source: IRS This is why blanket statements like “Roths are better” don’t hold much water. The decision boils down to your personal income situation, and that’s subject to change. With Betterment, however, our Forecaster tool does much of the work for you. Simply scroll down to its “How to save” section, and we’ll use your self-reported financial information to suggest not only the optimal order of retirement account types, but whether traditional or Roth contributions make more sense based on your projected future tax bracket. Just be sure to update your info as needed (raises, marital status, etc.) for the most accurate estimates. Now or later? Now that’s one less call to make The traditional vs Roth debate will likely rage on for years. But between content like this, and tools like Forecaster, we do our best to help you quickly clear this common investing hurdle. If your income is trending anything like the averages above, traditional deposits may make more sense, but the advantage will be slight, and it never hurts to hedge. Having both Roth and traditional funds gives you more flexibility when managing your income in retirement. Plus, you can spend less time stressing over the two, and more time building momentum toward your goal. Cash Reserve offered by Betterment LLC and requires a Betterment Securities brokerage account. Betterment is not a bank. FDIC insurance provided by Program Banks, subject to certain conditions. Learn more.

How to leverage your taxable investments into lending Examining the pros and cons of the Securities-Backed Line of Credit (SBLOC) Securities-Backed Lines of Credit (SBLOCs) are offered by The Bancorp Bank, N.A., Member FDIC, to Betterment clients. Betterment is not a bank. See more in disclosures. Sometimes in life, despite your best-laid plans, you need quick access to cash. Say you bought a new home and need to bridge the gap until you sell your old one. Or a smart business opportunity presents itself. If you have a sizable amount of investments in taxable accounts, you can leverage them into a Securities-Backed Line of Credit (SBLOC), a little-known but increasingly-available form of short-term lending. Unlike many conventional loans, SBLOCs typically provide access to the line quickly after approval. And crucially, they keep your assets invested and avoid triggering capital gains taxes. If the market drops, that means you avoid locking in those losses. And if the market goes up, that growth can help offset some of your lending costs. Plenty more details exist for this type of borrowing, so keep reading to learn more. The basics of SBLOC borrowing SBLOCs are revolving lines of credit you can use over and over again, as opposed to the one-time nature of many loans. Many lenders require at least six-figures’ worth of taxable investments to qualify for one, with credit limits often falling somewhere between 50% and 95% of the investments’ value depending on how risky they are. Betterment SBLOC powered by The Bancorp Minimum assets needed Approx. $150k in taxable assets or less, depending on their risk profile Maximum credit/loan available Approx. 50-95% of taxable assets, depending on their risk profile Interest rate Variable rate3 based on assets committed Repayment options Flexible As mentioned above, one of the key benefits of SBLOCs is that your taxable assets stay invested, giving them the chance to grow. SBLOCs are also more multi-purpose than many loans, with one notable exception being that you can’t use them to buy more securities or to fund margin loans. In addition to versatility, they tend to offer competitive interest rates lower than that of a personal loan or credit card. Our SBLOC offering, which is powered by our banking partner The Bancorp, has a variable interest rate that’s tied to The Wall Street Journal prime rate and discounted based on the amount of taxable assets committed4. Short-term lending does come with risks, however, and speaking with an advisor can help you weigh those risks relative to your specific situation. That’s in large part why at Betterment, an SBLOC is offered through our Premium tier, which gives you unlimited access to our team of advisors. When (and how) the bill comes due SBLOCs offer relatively flexible payback terms, with many only requiring monthly interest payments and some (like The Bancorp’s) with an option to add the interest to the loan balance instead of paying it right away. This is known as “capitalizing” the interest. Bear in mind that if the value of your investments drops enough, your lender may make what’s called a “maintenance call” and require you to reallocate your portfolio to obtain a higher borrowing power, provide additional collateral or sell some of your assets and pay any applicable capital gains tax1. The bottom line of borrowing this way If you’re looking for quick access to capital without disrupting your investment strategy, then an SBLOC may be right for you. And if you do come to that conclusion, then we and our trusted banking partner, The Bancorp, are here to help. They were the first bank to offer SBLOCs to independent advisors in 2004, broadening access to this type of borrowing. And their simple application process can generally provide a quick turnaround, helping fund today’s plans without touching tomorrow’s dreams.

How to plan for retirement It depends on the lifestyle you want, the investment accounts available, and the income you expect to receive. Most people want to retire some day. But retirement planning looks a little different for everyone. There’s more than one way to get there. And some people want to live more extravagantly—or frugally—than others. Your retirement plan should be based on the life you want to live and the financial options you have available. And the sooner you sort out the details, the better. Even if retirement seems far away, working out the details now will set you up to retire when and how you want to. In this guide, we’ll cover: How much you should save for retirement Choosing retirement accounts Supplemental income to consider Self-employed retirement options How much should you save for retirement? How much you need to save ultimately depends on what you want retirement to look like. Some people see themselves traveling the world when they retire. Or living closer to their families. Maybe there’s a hobby you’ve wished you could spend more time and money on. Perhaps for you, retirement looks like the life you have now—just without the job. For many people, that’s a good place to start. Take the amount you spend right now and ask yourself: do you want to spend more or less than that each year of retirement? How long do you want your money to last? Answering these questions will give you a target amount you’ll need to reach and help you think about managing your income in retirement. Don’t forget to think about where you’ll want to live, too. Cost of living varies widely, and it has a big effect on how long your money will last. Move somewhere with a lower cost of living, and you need less to retire. Want to live it up in New York City, Seattle, or San Francisco? Plan to save significantly more. And finally: when do you want to retire? This will give you a target date to save it by (in investing, that’s called a time horizon). It’ll also inform how much you need to retire. Retiring early reduces your time horizon, and increases the number of expected years you need to save for. Choosing retirement accounts Once you know how much you need to save, it’s time to think about where that money will go. Earning interest and taking advantage of tax benefits can help you reach your goal faster, and that’s why choosing the right investment accounts is a key part of retirement planning. While there are many kinds of investment accounts in general, people usually use five main types to save for retirement: Traditional 401(k) Roth 401(k) Traditional IRA (Individual Retirement Account) Roth IRA (Individual Retirement Account) Health Savings Account (HSA) Traditional 401(k) A Traditional 401(k) is an employer-sponsored retirement plan. These have two valuable advantages: Your employer may match a percentage of your contributions Your contributions are tax deductible You can only invest in a 401(k) if your employer offers one. If they do, and they match a percentage of your contributions, this is almost always an account you’ll want to take advantage of. The contribution match is free money. You don’t want to leave that on the table. And since your contributions are tax deductible, you’ll pay less income tax while you’re saving for retirement. Roth 401(k) A Roth 401(k) works just like a Traditional one, but with one key difference: the tax advantages come later. You make contributions, your employer (sometimes) matches a percentage of them, and you pay taxes like normal. But when you withdraw your funds during retirement, you don’t pay taxes. This means any interest you earned on your account is tax-free. With both Roth and Traditional 401(k)s, you can contribute a maximum of $24,500 in 2026, or $32,500 if you’re age 50 or over. Traditional IRA (Individual Retirement Account) As with a 401(k), an IRA gives you tax advantages. Depending on your income, contributions may lower your pre-tax income, so you pay less income tax leading up to retirement. The biggest difference? Your employer doesn’t match your contributions. The annual contribution limits are also significantly lower: just $7,500 for 2026, or $8,600 if you’re age 50 or over. Roth IRA (Individual Retirement Account) A Roth IRA works similarly, but as with a Roth 401(k), the tax benefits come when you retire. Your contributions still count toward your taxable income right now, but when you withdraw in retirement, all your interest is tax-free. So, should you use a Roth or Traditional account? One option is to use both Traditional and Roth accounts for tax diversification during retirement. Another strategy is to compare your current tax bracket to your expected tax bracket during retirement, and try to optimize around that. Also keep in mind that your income may fluctuate throughout your career. So you may choose to do Roth now, but after a significant promotion you might switch to Traditional. Health Savings Account (HSA) An HSA is another solid choice. Contributions to an HSA are tax deductible, and if you use the funds on medical expenses, your distributions are tax-free. After age 65, you can withdraw your funds just like a traditional 401(k) or IRA, even for non-medical expenses. You can only contribute to a Health Savings Accounts if you’re enrolled in a high-deductible health plan (HDHP). In 2026, you can contribute up to $4,400 to an HSA if your HDHP covers only you, and up to $8,750 if your HDHP covers your family. What other income can you expect? Put enough into a retirement account, and your distributions will likely cover your expenses during retirement. But if you can count on other sources of income, you may not need to save as much. For many people, a common source of income during retirement is social security. As long as you or your spouse have made enough social security contributions throughout your career, you should receive social security benefits. Retire a little early, and you’ll still get some benefits (but it may be less). This can amount to thousands of dollars per month. You can estimate the benefits you’ll receive using the Social Security Administration’s Retirement Estimator. Retirement accounts for the self-employed Self-employed people have a few additional options to consider. One Participant 401(k) Plan or Solo 401(k) A Solo 401(k) is similar to a regular 401(k). However, with a Solo 401(k), you’re both the employer and the employee. You can combine the employee contribution limit and the employer contribution limit. As long as you don’t have any employees and you’re your own company, this is a pretty solid option. However, a Solo 401(k) typically requires more advance planning and ongoing paperwork than other account types. If your circumstances change, you may be able to roll over your Solo 401(k) plan or consolidate your IRAs into a more appropriate retirement savings account. Simplified Employee Pension (SEP IRA) With a SEP IRA, the business sets up an IRA for each employee. Only the employer can contribute, and the contribution rate must be the same for each qualifying employee. Savings Incentive Match Plan for Employees (SIMPLE IRA) A SIMPLE IRA is ideal for small business owners who have 100 employees or less. Both the employer and the employee can contribute. You can also contribute to a Traditional IRA or Roth IRA—although how much you can contribute depends on how much you’ve put into other retirement accounts.

What is a tax advisor? Attributes to look for Since Betterment isn't a tax advisor, we often suggest that customers see a tax advisor regarding certain issues or decisions. Who exactly is a tax advisor and how should you think about picking one? Tax season is now upon us. Now that you’ve probably received all of your tax forms, you may be facing a choice for how to proceed with filing: do it yourself with tax software or hire a professional tax advisor? Although it certainly will be more expensive than using tax software, hiring a tax advisor makes sense for certain individuals, depending on their financial circumstances. Here are two important factors to consider when deciding if a tax advisor is right for you: Time: Even with tax software guiding you, filing your taxes yourself can be time consuming. You’ll need to make sure that you’ve entered or imported the data from your tax forms correctly, which often takes at least several hours, and your time is worth something. Complexity: The more complicated your financial situation, the more a tax advisor may be able to help you. Have partnership income, or income from an S corporation? Been subject to alternative minimum tax in past years? Received or exercised stock options this year? Tax software can handle these issues, but it will take time, and the risk of mistakes (and even an audit) increases. If you decide that your situation warrants professional assistance, some further questions are worth exploring: what exactly is a tax advisor and how should you think about picking one? Who counts as a tax advisor? Anyone with an IRS Prepare Tax Identification number (a “PTIN” for short) can be paid to file tax returns on behalf of others. But merely having a PTIN doesn’t tell you much about the tax preparer; tax preparers have different experience, skills, and expertise. What you really want is a tax advisor, a professional with a certification and experience level that qualifies her not only to prepare your return, but to use her knowledge of the tax code to provide advice on your financial situation. There are three different professional certifications to consider, each of which qualifies a tax advisor to practice with unlimited representation rights before the IRS. This means that in addition to preparing returns, they also are licensed to represent their clients on audits, payments and collection issues, and appeals. Certified Public Accountants (CPAs) CPAs have completed coursework in accounting, passed the Uniform CPA Examination, and are licensed by state boards of accountancy (which require that they meet experience and good character standards). Some, but not all, CPAs specialize in tax preparation and planning. You can find complaints about CPAs either by searching records with state boards of accountancy and at Better Business Bureaus. Enrolled Agents Enrolled agents are licensed by the Internal Revenue Service after they have passed a three-part examination and a background check. The IRS maintains complaints about enrolled agents on the website of its office for enrollment, and you can also find complaints on the National Association of Enrolled Agents website. Licensed Tax Attorneys Licensed attorneys have graduated from law school, passed a state bar exam, and are admitted to the bar in at least one state. Some, but not all, attorneys specialize in tax preparation and planning. Many tax attorneys have completed an additional year of law school study in a master’s program in tax (called a Tax LL.M. degree). Disciplinary actions against attorneys can be found by searching the state bar associations with which the attorney is registered. How to Select a Tax Advisor or Tax Consultant No tax advisor with one of the certifications described above is necessarily better than any of the others in all situations. Rather, what matters most is: How the advisor approaches the tax preparation process, including the specific experience the tax advisor has with issues relevant to your particular financial situation. Whether you feel comfortable with the tax advisor. How the advisor structures their fees. You may be able to screen potential advisors along several of these dimensions based on information you can find about them online; for others, an initial meeting will be critical to determine if the advisor is right for you. 1. Assess your confidence in the quality of a tax advisor's recommendations, as well as their experience. Here are a few specific factors to consider carefully when assessing the potential quality of a tax advisor's work. First, you should try to identify a tax advisor who will act ethically and with integrity. Before scheduling a meeting with a potential tax advisor, check to see if the advisor has been subject to any complaints, disciplinary actions, or other ethical infractions. When meeting with the advisor, be on the lookout for outlandish promises: if an advisor guarantees you a certain refund without having first looked at your returns, you should be wary (any promise that sounds too good to be true probably is). If the advisor suggests taking a position on a tax return that strikes you as overly aggressive (because it is not grounded in your actual financial situation) or if you simply do not understand something the advisor is saying, make sure to ask, and keep asking until you are satisfied with the answer. Having a tax advisor prepare your returns does not take away your responsibility for the accuracy of your tax return. Of course, an advisor who knowingly takes an improper position on a tax return will face consequences, but it is your return, and you can too. A good tax advisor also should provide more value than simply filling out your returns. She should help you to structure your finances in an optimal way from a tax perspective. Not every tax advisor has expertise with every nuance of the tax code, and so you’ll want to make sure that the advisor you select has significant experience with the particular issues for which you’re seeking expert advice. Of course, there are certain common issues that every good advisor should know: for example, how to maximize the value and efficacy of your charitable contributions, how to weigh the tax tradeoffs between renting and owning a home, or how to save money for or gift money to family members. For other less common situations, however, you’ll want an advisor with specific experience. If you own a business or are self-employed, if you work for a startup and own a significant number of stock options, or if some portion of your income is reported on a K-1 (because you are a partner in a business or own shares in an S corporation), you likely will be best served by finding an advisor who has worked with a significant number of clients with these tax issues. Finally, maintaining the security of your personal information is more important than ever these days, and the inputs for your taxes is some of the most sensitive information you have. There will always be some risk of data breaches, but a good tax advisor will take steps to safeguard your information. Make sure that you ask about how the tax advisor stores your personal information and what methods she uses to communicate with you regarding sensitive topics. You also should ask about whether the advisor has ever been subject to a data breach and what steps the advisor is taking to protect against future ones. 2. Assess your comfort level with the working relationship. You want to make sure you have a good rapport with your tax advisor, and that you feel like you understand each other. At your first meeting, make sure to bring three years’ worth of old tax returns for your advisor to review. Ask if you missed any deductions, and if your old returns raise any audit flags. Consider the advisor’s responses. Does the advisor seem willing to spend time with you to ask thorough questions to fully understand your situation? Or does she rush through in a way that makes you feel like she might be missing certain issues or nuances? Does the advisor explain herself in a way that is understandable to you, even though you don’t have a tax background? Or does the advisor leave you confused? A tax advisor may work by herself or be a member of a larger organization or practice. Each approach has its benefits and drawbacks. You can be sure that a solo practitioner will be the one who actually prepares your returns, but it may be harder to reach the advisor during the height of tax season, and the advisor may find it difficult to get a second opinion on tricky issues or issues outside her core areas of expertise. On the other hand, although the collective expertise of a larger practice may exceed that of even a very talented advisor practicing on her own, it may be more difficult to ensure that your return is prepared personally by your advisor. Finally, think about whether you want to work with a tax advisor who is already part of your social network, or who has been referred by a trusted family member or friend. On the one hand, having the seal of approval of someone you know and trust may help to assure you that the advisor is right for you. On the other hand, consider whether it will be harder to part ways with the advisor down the road if she fails to meet your standards. 3. Evaluate the cost of the tax advice. The final issue you’ll want to think about is cost. Tax preparation services are a low margin business (particularly with the competition that tax preparers face from low cost software), but you can expect to pay more for tax planning services or advice. The best cost structure is one where the tax advisor charges for her time or for the specific forms that the advisor completes and files. By paying for the advice itself and not a particular outcome, this cost arrangement properly aligns the incentives between your tax advisor and you. Be wary of compensation structures that create the potential for conflicts of interest between you and and your tax advisor. For example, some tax advisors may try to earn additional revenue from you by selling other services or financial products along with tax preparation. Ultimately, when it comes to cost, your goal should not be solely to minimize your combined out of pocket cost to the IRS and your advisor for this year’s tax return. Rather, you should take a longer term view, recognizing that good, personalized tax advice can help you to structure your financial life in a tax-efficient way that can pay dividends for years to come.