Which statement is true about tax planning included in financial planning?

• A. It must be provided only within the CFP's competency; avoid giving tax advice beyond scope; refer to tax specialist as needed.
• B. It should be the primary focus of the plan.
• C. It can be provided even if out of scope without referral.
• D. It should be omitted to avoid liability.

Answer: (A)

Tax planning is an integral part of a comprehensive financial plan, but a CFP professional must stay within their own scope of competence. The best approach is to provide tax planning only to the extent of what you can competently advise, and when a tax issue lies outside that scope, refer the client to a qualified tax specialist. This protects the client from potentially flawed tax advice and aligns with ethical practice, while you coordinate with the tax professional to ensure the overall plan considers how taxes affect investments, retirement, estate planning, and other elements. The other options overstate or misstate the role—treating tax planning as the primary focus, providing advice out of scope without referral, or omitting tax planning altogether—each of which conflicts with responsible, professional practice.