The nation’s top financial advisory organizations today urged Congress to reinstate and expand the tax deduction for financial advice as part of stimulus legislation to encourage Americans to use investment advisors.

The Investment Adviser Association (IAA), the Certified Financial Planner Board of Standards (CFP Board), the Financial Services Institute (FSI), the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA) called on lawmakers in a letter to restore and expand the deductibility of professional investment and financial planning advice. The deduction was repealed in 2017 with enactment of the Tax Cuts and Jobs Act (TCJA).
“The repeal of the deduction may have appeared inconsequential with 2017’s rising stock market, sustained job growth and slowly increasing real wage growth,” said Kevin Keller, CEO of the CFP Board.

“But in this moment of crisis, millions of Americans, including many near retirement, are watching the money they worked so hard to earn and to save evaporate virtually overnight. It is crucial that they have affordable access to competent, ethical advice now and in the foreseeable future.”

The organizations are asking Congress not just to restore the tax deduction for professional investment and financial planning advice, but to expand it so that any individual or business owners who needs financial advice to help survive the economic crisis may be able to use it.

The five groups actively lobbied Congress unsuccessfully to include the expanded advisory fee deductibility in the $2.2 trillion coronavirus emergency stimulus package that was signed into law on March 27.

The financial service organizations urged lawmakers to restore the deduction for investment advice and financial planning services without the 2% threshold, so that any American seeking advice can use the deduction.

Prior to the 2017 tax law, the deduction was limited to taxpayers whose advisory fees exceeded 2% of adjusted gross income. That limit was criticized by many groups and Democrat lawmakers who said it unfairly benefitted upper-income households more than middle-income households.

The groups are also calling on their members to urge key lawmakers in the House and Senate to support the proposal in “phase four” relief legislation being considered by Congress. House committee chairs are expected to make recommendations for the next stimulus package by Friday, according to the IAA.

“Investors and savers are certainly anxious in this environment and unsure about whether they will be able to meet their financial goals,” IAA President and CEO Karen Barr said in a statement.  “Investment advisors and financial planners have never been more important than they are in these extremely difficult times. And they are working hard to help American taxpayers make wise decisions about their finances in the coming months as the longer-term economic impact becomes clear.”

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