Why Most Financial Advice Is Built on Incomplete Data | Kevin Knull with Dan Pascone | Ep #57

Kevin Knull has spent his career on the technology side of financial planning: he went from the military into distribution work, became a CFP, ran RIAs, broker-dealers, and family offices, and built MoneyGuide Pro, one of the most widely used financial planning platforms in the industry, before its acquisition. Today he runs TaxStatus, a company built around a single observation: "I have never met an advisor ever in my career that has all of the information."

His analogy is blunt. Going to a financial planner without sharing your full picture, he says, is like going to a doctor and asking for a full physical exam, but only letting them examine you from the shoulders up. Clients leave things out for ordinary reasons: they have accounts with multiple advisors and don't want any one of them to know, they're embarrassed about a debt or a decision, they genuinely forget something as they age, or a spouse simply hasn't shared everything with the other.

None of that makes anyone a bad client. It does mean the advisor is rendering fiduciary-level advice on a partial dataset, and both the client and the advisor are exposed as a result. If you're evaluating a planner, or wondering how thorough your current one really is, our guide to vetting a financial planner covers the questions that surface exactly this kind of gap.

Here's the piece most people don't realize: the IRS isn't just holding the numbers you put on your return. Every bank, custodian, employer, and business you've invested in is required to report to the IRS directly, generating W-2s, 1099s, K-1s, and 1065s that land in the same system as your filed return. TaxStatus exists to let a client securely authorize their advisor to pull that data, using the same ID.me authentication the IRS, the VA, and the Social Security Administration use, in about 41 seconds, rather than filling out a 70-page discovery form or handing over a stack of tax returns.

What comes back is substantial: ten years of filed returns, every dollar of reported income and where it came from, marginal and effective tax rates, whether estimated payments were made, and even whether a return is currently flagged for audit. None of it is shared or anonymized, it goes only to the advisor the client authorized. The point isn't to replace the conversation you have with your planner, it's to make sure that conversation starts from the same numbers the IRS already has, instead of whatever you remember to bring to the meeting.

A tax return is self-reported. You can technically write down anything on it, which is exactly why the IRS cross-references it against everything reported by outside parties. Kevin puts the disclosure gap in real numbers: CPAs will tell you that roughly 30 percent of the time, a client fails to disclose all of their income, and the IRS has up to three years to catch the mismatch and come back for it. By then, an advisor may have already recommended a Roth conversion or another strategy built on a number that turned out to be wrong.

Kevin's own practice is to put this in writing at the top of every planning engagement: if a client hasn't told him everything, he can't be held accountable for the advice he gives. It's not a disclaimer so much as a statement of how planning actually works: the completeness of what you share sets the ceiling on how good the advice coming back can be.

Most people hear "extension" and assume it means trouble. Kevin pushes back on that directly: an extension doesn't change when you owe taxes, you still pay by the April deadline, it just gives you six more months to file with complete information instead of filing blind. That matters most for anyone with K-1 income, since those forms often don't arrive until September. File without them and you're either guessing or amending later, which adds cost and complexity either way.

The bigger issue is timing. By October, Kevin says, your planning window has already shrunk dramatically. A qualified charitable distribution has to be completed by December 31st, not promised. A Roth conversion and charitable bunching both take time to execute correctly, and equity comp timing decisions need lead time too. His rule of thumb: tax planning should start in the spring and run through October, not begin in October. The IRS's own transcript and Online Account tools are a reasonable starting point if you want to see what the IRS already has on file for you before that window closes.

Kevin recently surveyed roughly 100 CPA firms and asked how much of their time actually goes to proactive tax planning. The answer: about 7 percent. Most of the rest goes to simply gathering data from clients. He argues AI changes the math here, not by replacing judgment, but by removing the bottleneck: evaluating 100 tax strategies for a single client by hand can take a firm 45 days and roughly 1,000 hours of work, so in practice, most firms just don't do it and instead look at a handful of strategies they assume are most relevant. With complete data, that same evaluation can run in minutes.

The caveat is the same one that runs through this entire episode: AI is completely dependent on its inputs. Feed it an incomplete picture and it will confidently produce a wrong answer faster than a person would. Kevin doesn't think this displaces advisors or CPAs, he thinks it shifts what they spend their time on, away from computation and data-gathering and toward the judgment calls only a person should be making: which strategy actually fits this client's real situation.

Most people assume the risk of incomplete financial information only runs one direction: you underreport something and eventually the IRS catches up with you. What most people miss is that it runs the other way just as often. An advisor working from a partial or outdated picture can just as easily recommend a Roth conversion, a large charitable gift, or an equity sale that's wrong for your actual full financial life, not because the advice is bad, but because the inputs were incomplete. The fix isn't more sophisticated planning software. It's making sure the numbers going in are the real ones.

Take an executive we'll call James: 52 years old, a divisional president with a base salary, RSU vests, and minority stakes in two real estate partnerships that issue K-1s each year. His advisor, working from the accounts he could see, recommended a $150,000 Roth conversion in December to use up space in what looked like a lower tax bracket that year.

What the advisor didn't know: James's K-1s, which didn't arrive until September, showed an unusually large pass-through gain that year from a property sale inside one of the partnerships, pushing his actual taxable income well above what the advisor's model assumed. The conversion, built on an incomplete picture, landed James in a higher bracket than planned. The fix going forward was straightforward: file on extension until the K-1s were actually in hand, and let the conversion decision wait for the real numbers instead of guessing every December.

This conversation is for executives and business owners whose financial life doesn't fit neatly on a single W-2: K-1 partners, RSU and equity comp holders, anyone with accounts or advisors scattered across multiple institutions, or anyone whose tax and planning conversations have felt like guesswork because nobody, including you, had the complete picture in front of them.

If you're not sure whether your current plan is built on your full financial picture, income, equity comp, taxes, and every account, a second look can tell you. Book a Free Wealth Strategy Call with Tailored Wealth and we'll talk through where things stand.