There’s an old saying that goes: “It’s always the cobbler’s children that have no shoes.”

Likewise, doctors frequently neglect their own health… and financial advisors fail to make important financial moves for themselves, even though they may talk to their own clients about it every day. 

When they do so, they neglect the most important client in the entire practice: themselves.

This article is written especially for independent financial service professionals who are owner-employees of their own practices. If you own the firm — whether as an S-Corp, LLC, or (hopefully not!) as a sole proprietor — your year-end planning window is a vital tax and cash flow planning opportunity. 

And thanks to the tax changes rolling out under the One Big Beautiful Bill Act (OBBBA), the next few weeks are even more consequential than usual.

Prepay Business Expenses

If your business uses the cash method of accounting (most small financial advisory practices do), you can reduce your taxable income on paper by pre-paying certain business expenses for 2026. You can claim a deduction for 2025 as long as the benefit doesn’t extend beyond 12 months (or the end of the next tax year, whichever is earlier). 

So look for ways to move expenses to the left, into the current year. Good candidates include: 

• Rent
• Insurance premiums
• Marketing retainers
• Website development
• Software subscriptions
• Periodical subscriptions
• Conference fees
• Travel expenses
• Postage
• Utilities
• Telephone services
• Office cleaning/janitorial services
• Your Estately subscription (!)
• Website hosting fees
• Domain renewals 
• State RIA registration renewals
• FINRA regulatory filing fees
• Industry membership dues (NAFPA, FPA, etc.)
• Continuing education courses
• Professional services
• Copywriting retainers
• Research subscriptions and journals  (Morningstar, Kitces.com., etc.)
• Financial planning and appointment scheduling software subscriptions.

You can get a double benefit by converting all monthly subscriptions into cheaper annual subscriptions before the end of the year.

Note: Prepayments must be contractual, not voluntary.

Paying early on an open-ended contract often does not create a deduction.

Take Advantage of OBBBA’s 100% Bonus Depreciation and Expanded Section 179

Now’s a great time to invest in capital equipment.

Normally, MACRS rules require you to spread your deduction for qualified capital equipment over the expected useful life of the item. So you couldn’t get the whole deduction up front. You had to spread much of it out over several years.

But the One Big Beautiful Bill Act (OBBBA) restored 100% bonus depreciation for qualified equipment — new or used — placed in service after January 19, 2025. 

Combined with the expanded $2.5 million Section 179 limit (phasing out starting at incomes of $4 million), this is one of the most favorable environments advisory firms have seen in years.

This applies to most tangible property with a 20-year MACRS period or less. Used property is included, if it  meets certain requirements (e.g., arms-length transaction, not previously used by the taxpayer, etc.).

So if you need anything from new computers, cameras, lighting, servers, furniture, or conference room upgrades, year-end is the time to think about it.

To qualify for a current year deduction, the equipment must be placed in service by December 31.

Note: Qualifying businesses that use the cash method can take the full 100% bonus depreciation, even if you put it on your business credit card or take a loan.

Stuff Your Roth 401(k) 

You have heard it said, “max out your 401(k) contributions before the end of the year so you don’t lose the employer match.”

But we say unto you that this may no longer be a good strategy––especially for those of you with growing practices who have reason to believe your income will be higher in the future than it is now.

First, the law changed: Thanks to SECURE 2.0,  the company match can now go right into the Roth 401(k)!

Second, Roth 401(k)s are no longer subject to lifetime RMDs. 

Third, with today’s comparatively low income tax rates, current year deductions aren’t worth as much as they used to be. And adding to your tax-deferred retirement income “bucket” can become a long-term tax liability. 

The reality is this: a pre-tax deduction today is usually a tax bill waiting to happen later, often at higher balances and potentially higher brackets. Popular tax advisor and author Ed Slott has long compared tax-deferred accounts to a “ticking time bomb.”

In future years, this additional taxable income you would have to take in retirement, especially after your RMDs kick in, don’t just involve ordinary income taxes: Left unmanaged, your 401(k), traditional IRAs, and pension, Social Security, and other sources of ordinary income can combine to cause a cascade of unwelcome tax bills.

For example,

• The 3.8% tax on net investment income that kicks in for higher income earners
• Higher tax rates on Social Security benefits
• IRMAA adjustments, resulting in potentially thousands of extra dollars per year in higher Medicare Part B and Part D premiums. 
• Higher capital gains tax rates

If you’re not careful, the warm feeling you get from a current year income tax deduction will get replaced by some very nasty burns as the ticking time bomb of deferred income taxes eventually combines with these other taxes––and blows up in your face. 

These amounts are taxable income in the current year. But unlike money that you might use to fund a Roth IRA out of ordinary income, this money would not be subject to FICA/FUTA taxes - yet another reason to establish a solo Roth 401(k) of your own for your advisory practice, if practicable, rather than routing Roth contributions through a Roth IRA out of your salary. 

If your company’s 401(k) custodian permits it, top off your remaining contributions this year using a Roth option - including your employer contributions.

And if your current 401(k) vendor doesn’t support Roth accounts, you have the freedom as a business owner to go find a vendor who does.

When you find a good one, this is a great opportunity to call business owner clients and prospects and add some value by seeing if the move makes sense for them, too. 

Take Control of RMDs - Before They Take Control of You

Start executing your Roth conversion strategy early and often. If you have significant balances in tax-deferred retirement accounts, the sooner you can start migrating that money into a Roth, the better.

Your RMD years will be upon you before you know it. Converting at least part of those IRAs to Roth while you can still dictate the timing and tax bracket reduce or prevent nasty long-term tax consequences later.

Remember, once RMDs begin, you lose that control. You can’t convert your RMDs into a Roth. You have no choice but to eat the full tax bill - and accept the cascading effects of multiple tax types mentioned above.

Now that you know about what your income will be at the end of the year, convert enough IRA assets to “fill up” your lower tax brackets - especially if you are able to pay the current year income tax bill with money from outside the Roth IRA.

Tip: This is a good way to deploy cash you raise from selling assets in your year-end capital gains loss harvesting (or gain harvesting) efforts, described below. 

Harvest Gains as Well as Losses 

Sure, we all encourage clients to do some tax loss harvesting as we come to the end of the year.

But in some circumstances, it makes sense to harvest gains, as well. Especially in 2025, which has been characterized by outsized tech gains but potentially undervalued opportunities elsewhere. 

In 2025, single filers with up to $48,350 in taxable income and married couples filing jointly with up to $96,700 in taxable income (not AGI!) can harvest capital gains at a 0% long-term capital gains tax rate.

Taking some of those tech sector gains off the table can make great sense if: 

• Your ordinary income this year is unusually low (or can be made unusually low with some last-minute deductions).
• You have dependents you can gift appreciated assets to (who can harvest these gains yourself at a zero-percent capital gains rate.

Tip: If you have kids (or grandkids) who have investment accounts with large embedded gains, and they’re still in school or working part-time, they can sell this year and in some cases wipe out the tax bill entirely –– up to certain limits. Now’s the time to get this done, before they graduate and enter full-time employment… and a higher capital gains tax bracket. 

Look At Your S-Corp Salary/Dividend Mix 

A surprising number of advisor-owners get “reasonable compensation” wrong, even though they give this same advice to business-owner clients. If you’re structured as an S-Corp, a year-end review of your salary and distribution mix is essential.

Remember: Your W-2 wages drive your retirement-plan contribution eligibility, your employer match calculations, and your Medicare tax obligations. If your salary is too low, you’re painting a target on your back for IRS scrutiny.

But taking too much in salary means you’re paying unnecessary payroll taxes.

December’s payroll is your chance to bring things into balance.

Start a Cash Balance Plan for Big Deductions

If it’s big deductions you’re looking for, it’s tough to beat a cash balance pension plan.

For advisory firms with strong revenue and stable profits, a cash balance plan lets the owner shelter far more income than is possible with an ordinary Solo 401(k) or traditional profit-sharing plan.

The older you are, the more you can contribute. For older owners in their 50s and 60s, eligible contributions can run to $150,000 to $400,000 per year and even more, depending on age and plan design.

Yes, you still have the same deferred tax problem described earlier. But it gets cash out of the business and secures large amounts against the potential claims of creditors

Cash balance plans work best when revenue is stable, staff numbers are low, and the owner is over 45. They can transform your tax liability and accelerate retirement savings dramatically. If your 2025 income is abnormally high, this may be the tool that brings your bracket back under control.

This can help a lot if your income this year is unusually high. But remember that you need to commit to funding the plan relatively consistently year after year. 

Deadline: It’s not too late to get this done. Thanks to the SECURE Act, you potentially have until your tax filing deadline (with extensions) to establish and fund a cash balance plan for 2025. But don’t wait: The sooner you start modeling your plan, the more options you’ll have.

Allow a few weeks for paperwork and processing.

Pay SALT Taxes at the Entity Level 

Thanks to OBBBA, the cap on state and local income tax deductions rises to $40,000 (phasing out gradually between AGIs of $500,000 and $600,000, where the cap reaches $10,000).

But lots of successful advisors blow right past the cap level, and have to pay additional federal income taxes as a result––on money they don’t even get to keep.

That’s a problem for high-income W-2 wage earners. But if you own your own advisory practice, owners have an available remedy: Pass-through-entity taxes (PTETs).

By paying taxes at the entity level, using your business checkbook rather than your own,, you effectively convert your SALT from a personal expense to a business expense. Which is (generally) fully deductible against business income. The allowable deduction could potentially be modified by other limitations, like 163(j), alternative minimum tax, and state law. 

Most states require PTET payments before the end of the calendar year, so work with your tax advisor and model this out quickly. Also, be mindful of the deadline for your particular state, as different states have very different rules.

You should also have your tax advisor work out the possible knock-on effects of this strategy on your available qualified business income (QBI) deduction before pulling the trigger. But in the right circumstances, paying SALT taxes using your business can be very effective at lowering overall income tax liability. 

Make Charitable Contributions Before Year-End.

Charitable planning gets more complicated starting in 2026. 

That’s when itemized deductions for charitable deductions become subject to a 0.5% of AGI floor – effectively incentivizing the bunching of charitable deductions every other year, rather than spreading them out. 

By pulling your charitable contributions forward, you not only reduce your taxable income for the year, you also avoid having to pay taxes on that 0.5% threshold. 

Qualified Charitable Distributions (QCDs) remain one of the best tax tools for anyone age 70½ or older. With a ceiling indexed to $108,000 in 2025, QCDs can neutralize large chunks of RMD income, reduce MAGI, and lower Medicare surcharges — without requiring you to itemize.

If you’re age 70½ or older, you can make qualified charitable distributions (QCDs) of up  to $108,000 in 2025. These can be transferred directly from an IRA to a qualified charity. This has multiple beneficial effects: 

• It reduces reduces your current taxable income,
• It lowers your potential Medicare IRMAA surcharge exposure
• It potentially lessens exposure to the 3.8% tax on investment income for high income earners. 
• It potentially lowers your effective capital gains tax rate.

Note: Starting in 2026, taxpayers who don’t itemize will finally receive a modest above-the-line deduction of up to $1,000 (single) or $2,000 (joint) for cash gifts to public charities (excluding DAFs and most private non-operating foundations).

If you make smaller cash gifts and don’t itemize, you may be better off making your contribution after the new year. 

Hire Your Spouse and Children.  

Advisors routinely tell business-owner clients to hire their children. But many don’t do it themselves — even though it’s one of the most reliable tax strategies available. And it works very well for financial advisory practices.

Absent any other income, your child working in your practice can earn up to $15,750 this year in the zero income tax bracket. (They may still have state income taxes and federal FICA taxes.)

Their wages are deductible to your business, and they can use the money to fund a Roth IRA. It’s one of the most beneficial moves a family can make, long term, and it helps keep a lot of money under your roof instead of going to the IRS.

You can also hire your own spouse. This potentially gives your business access to additional fringe benefits,  and allows them to make additional contributions to retirement plans. 

Just be sure the pay is reasonable, the work is legitimately performed, and you document everything.  

Decide Whether to Delay QBI to 2026.

As a financial advisor, you fall into a special tax category called a Specified Service Trade or Business (SSTB).

That label matters because it places strict income limits on who gets to claim the 20% Qualified Business Income (QBI) deduction. 

That’s why the QBI deduction can be so tricky for advisory-firm owners: You get it when your income is under the threshold. You lose part of it once you enter the phaseout range. And once your income rises above the top of that range, the entire deduction disappears.

OBBBA changes those income limits substantially in 2026. The phaseout range widens, which softens the penalty for higher-income advisors—but not until next year. For 2025, the old tighter rules still apply, making it easy to unintentionally tip into the zone where the deduction evaporates.

So be careful this year about how much income you recognize for 2025. Recognize too much income for this year, and you could blow out your 20% QBI deduction entirely. 

The right move depends entirely on where your taxable income sits relative to the phaseout thresholds. This is another issue you should model carefully with your tax advisor.

Make your appointment now. They get busy at the end of the year. 

Take Your First RMD - Even If You Don’t Have To

If you’re already past your first RMD year, your 2025 RMD is due by December 31.

If you turn 73 in 2025, your first RMD is due by April 1, 2026.

But it may be a good idea to take your first RMD before the end of the year. That spreads them out and prevents having to stack two RMDs for tax year 2026, which could trigger other tax issues. 

 If you’re not 73 yet, look at converting some tax-deferred money to a Roth while you still have flexibility.

Final Thoughts

Financial advisors spend their days helping clients make smart decisions. Yet too often, they let their own planning become an afterthought. Year-end is when everything crystallizes — income is known, brackets are clear, opportunities are concrete, and the cost of inaction is real.

This year carries even more weight. OBBBA reshapes dozens of planning rules, many in ways that affect advisors more than their clients. You have a rare opportunity to capture tax advantages that won’t look the same next year — and to position your firm for a stronger, more tax-efficient 2026 and beyond.

Now take care of your own house.

And call your clients and prospects and help them do likewise.