Published in WealthManagement.com, Mar 01, 2017
The next step is maintaining careful documentation of a client’s travels. Much of this responsibility falls on the client, which can be an iffy proposition. Donna Cuiffo, managing director at Clarfeld Financial Advisors, recommends taking as much advantage of any client support staff as possible. “Talk to assistants,” she says, “they’re usually very keen on the need to track time.” Expense reports, official itineraries, credit card statements and even phone records can be helpful in establishing a clients whereabouts on any given date if audited. Crucially, a plane ticket isn’t enough. Mariner explains, “You need proof from both ends. You have to leave and you have to land.” Cuiffo adds that most auditors recognize just how difficult it can be to provide evidence that you were somewhere, and has seen them accept “Anything from a meal receipt to trainer’s bill.” Still, she notes that many clients basically have to “open up their entire life to prove where you were.”
That being said, the audit experience for most won’t be as intimidating as this all makes it sound. Your client won’t simply get a tax bill without explanation, they’ll get a call or letter with some questions about their whereabouts on certain dates. Cuiffo explains, “First contact is a conversation, not a bill. Days first, taxes later.”
Advisors need to be able to answer inquiries about those “days,” because if they can’t, that’s when the really hard questions begin.