There are “clear anti-tax biases” in the private wealth industry that are both culturally embedded and in client communication, a report from the Progressive Advisors’ Movement has suggested.
The report, 'The Private Wealth Industry & Tax: Politically Biases, Ethically Compromising & Failing Clients', argued there is a “strong ‘anti-tax’ culture” within the industry that impacts services and communications.
The research said the industry uses homogenous “anti-tax” language in its communications and is "too quick" to default clients into products and services focused only on tax reduction and tax-led structuring.
After analysing “tens of thousands of words across 100 websites of leading private client tax firms”, the research found “only a single reference to tax that could be described as positive or ‘pro-tax’” and further stated that “the rhetoric, framing and language used to talk about tax was almost uniformly negative”.
The report also said: “It is very rare to have such homogeneity within an industry discourse. It indicates how normalised the negative framing of tax has become.
“We expected to see tax being positioned in a range of different ways by different private client firms, yet what we found was a set of startling consistent ‘anti-tax’ constructions.”
The research also included input from more than 100 current and former practitioners (40 per cent of whom were financial planners), who reported feeling that the industry was 50 times more likely to be seen as “anti-tax” than “pro-tax”.
To remedy these concerns, the Progressive Advisors’ Movement suggested that a tax neutral language pledge should be adopted to “depoliticise” the language used by firms to move from “anti-tax” to a tax neutral approach.
The research stated that it hoped that the pledge would lead to a “rapid transformation” in practice around sector linguistics.
"Failing clients"
This was not the only issue identified within the report, however, as it also accused the industry of “failing” clients with tax positive views.
The report suggested that there is a particular “blind spot” within the industry for supporting clients who are interested in civic duty, citizenship and more equitable society building as it relates to tax rather than philanthropy.
It detailed that a “clear failure” was reported within the research’s survey with regard to how well the private client industry translates values into services, with 44 per cent of respondents saying that they did not feel their firm does a good job of translating client values into products/services they are offered.
“Whilst this is less than half of respondents it still represents a huge proportion of the sector who are failing to translate client values into services even when those values are effectively understood”, the report stated.
To address this issue, the report suggested that private client advisers should be trained to understand clients from a diverse range of attitudes towards tax and not default to pushing anti-tax behaviors on clients.
tom.dunstan@ft.com
