Immediately after Roth Iras were introduced in the late 1990s, CPA John Azodi of Kansas City, Mo., told 100 of his tax planning clients that they should open one. Yet when he saw them at tax time a year later, just two of them had taken his advice.
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"I thought, 'If I could have done this myself, I wonder how many people would have opened one?'" he said. The question prompted Azodi to get his own licenses to sell securities and begin offering as a planner.
Fifteen years later, Azodi runs a program through Panora, Iowa-based annuity provider Brokers International to teach CPAs like himself to become planners. Thus far, 600 CPAs have taken one of his classes or seminars. Azodi said there's a need for accountants and investment professionals to share.
"I personally believe that every CPA either needs to provide these [investment] services or be much more in-depth in understanding them," he said. "Often, there is even an adversarial relationship between CPAs and investment professionals. These groups really should work with each other because they really don't understand each other. When the two don't communicate, the client suffers."
When CPAs don't work as planners, they can suffer too. Salary research firm PayScale found that CPAs with 20 years of experience or more make between $48,633 and $148,677. That compares with $44,042 to $255,321 for financial planners with the same number of years in the trenches, according to the firm.
Many CPAs don't become planners because of their personalities, Azodi said: "They are not very proactive people." Key skills for planners include the ability to assert one's self, to express opinions and to charge for differentiated services, he said. He estimates that just 25 of the CPAs whom he has taught have obtained securities licenses themselves or are in the process of doing so. Most are getting licenses to sell life insurance, long-term-care policies and annuities. About half are obtaining licenses to sell mutual funds and to manage their clients' money.
He hopes they can provide more enlightened tax advice. "A lot of clients will ask their CPAs about something they got from their financial planner," said Azodi, "and many times CPAs will knock it down because they don't [understand] it. ... I think the same thing often happens with CPAs who kill a deal in order to make their clients safe, rather than [approve an investment] to make them better."
About five years after obtaining his securities licenses, Azodi said that he dropped the accounting side of his practice for new clients. For every dollar he brings in on the tax side of his business, he brings in another $3 for his planning work. Over the course of those five years, he said, he has increased his income threefold.
For the rest of the year, Azodi will teach classes around the country, including free seminars for other CPAs interested in following in his footsteps. Another 400 professionals are expected to finish his program by the end of the year. He also plans to mentor 100 CPAs in a new program.
"For many CPAs, it's overwhelming to add another level of in-depth education," Azodi noted. "They are very detail-oriented people, so it takes them a while to decide."