The Relationship-Building Power of Digital Tax Platforms

The trend to digital filing of taxes continues to gain steam, with the vast majority of U.S. returns submitted electronically. The federal government is planning investments in the coming years to bring even more filers online. Digital tax preparation and filing remains a highly fragmented environment, however, with one player holding a dominant position and others maintaining relatively equal slices of the market pie. 

Investors who use these tools tend to be young and affluent. This represents an opportunity for wealth managers, who can deepen investor relationships and improve workflows by forming smart partnerships with providers in the space. These partnerships represent only a first move, of course. The next step will be the transformation of the investor tax-management experience from an April event into a year-round, managed process, a rendering for which the deployment of innovative digital tools will be key. 

Key questions discussed in this report:

• What are the opportunities for wealth managers amid a highly fragmented tax-preparation marketplace?
• What kinds of partnerships with tax-filing platforms make sense for wealth managers?
• Why do users of tax preparation software tend to be younger and more affluent?

Companies Mentioned:

Ally Invest, Amazon, April, Bank of America\, Block, Charles Schwab, Citi, Coinbase, Column Tax, Costco, Edward Jones, EY, Fidelity, FreeTaxUSA, Google, H&R Block, Interactive Brokers, Intuit, JPMorgan Chase, Liberty Tax, Microsoft, Morningstar, Robinhood, Target, TaxAct, Taxfyle, TaxSlayer, TIAA, Truist, USAA, Vanguard, Wells Fargo, Zacks