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Financial Planners Worry CPAs Are Too Cautious

November 19, 2010

CPAs should be moving more aggressively into offering financial planning services, according to a series of speakers at the Accounting Today Growth & Profitability Summit.

The summit, which just wrapped up in Orlando on Thursday, featured a financial planning track. I sat in and introduced several of the sessions. Louie Rosales, chief marketing officer at Honkamp Krueger Financial Services, spoke about how accountants should “think outside the box” about what they can do to get a good return for their clients.

He related the story of one CPA who thought he had a good relationship with his client, but found out the client had gone to someone else for help with a financial services plan. The CPA went to the client and said he could do that too, but by then it was too late. “Clients really and truly want your help in this area,” he said.

Igor Zey, president and CEO of Professional Financial Resources Inc., talked about the close relationship he had formed with one CPA he worked with, so close in fact that he ended up marrying her. “Through my work, I met my wife, who is a CPA,” he said. “In my case it was a resounding success.”

He believes that the overwhelming majority of clients want to work with CPAs as financial advisors. Clients have a strong desire to obtain investment and insurance products from their most trusted advisors, he said. Many CPA clients are already high-net-worth individuals who need financial planning help, and the CPA is their most appropriate point of connection.

“Knowledge is knowing that a tomato is a fruit,” Zey pointed out. “Wisdom is knowing not to put it into a fruit salad.”

BAM Advisor Services CEO Mont Levy discussed his wealth management practice. “The job of the wealth manager is to fill in the gaps,” he noted. “Wealth management means never having to be a product manager.”

He pointed out that many CPAs are already involved in wealth management. He cited a study that found 54 percent of CPA firms with greater than $10 million in annual revenue, and 36 percent of CPA firms with between $2 million and $10 million in annual revenue, already offer financial services. In addition, 4,500 CPAs hold the Personal Financial Specialist designation, and that number is growing every year.

1st Global chairman and CEO Tony Batman spoke about the opportunities for CPAs that partner with a firm like his. However, he has found that many CPA firms are loath to disclose how much they have in assets under management.

Mike Pagano, who works with Batman as executive vice president and chief investment officer at 1st Global, gave a thorough rundown of many of the provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act that will affect registered investment advisors. He is concerned about the fiduciary standard that the bill will impose on many investment advisors. “The fiduciary duty standard is far higher than most RIAs realize,” he noted.

Joseph Sedita, managing member of Sedita Kilton & Co., spoke about the “agony and ecstasy” of adding financial services to your practice. He partners with 1st Global and said he was “wandering in the wilderness” until he got into financial planning. He believes it’s important to have a “passionate feeling that you are doing the right thing for your clients.” Other “cool things” include less time at the office, less reliance on traditional accounting work, and “maybe, just maybe, a future without timesheets.”

“The challenge is, if you’re going to get into financial services, you need a champion, you need a leader,” said Sedita. “You also need team buy-in or you can’t survive.”

Comments (2)
Many of the clients that come to me after having a CPA do their taxes are full of fear. They are afraid to write off perfectly legal deductions because "the CPA never let me write that off or the IRS will get me if I deduct that!" These CPAs have instilled their own fear in the clients! I'm sure Circular 230 has a lot to do with it, but when this fear causes the client to have an enormous tax bill, it must come to an end. Can these CPAs truly say they are serving their clients or are they just collecting fees for incomeplete jobs?
Posted by Small Business Tax Professioal | Thursday, November 25 2010 at 11:34AM ET
CPAs that rely on an outside strategic partner for their financial services practice are often more successful and more profitable than firms with in-house financial services practices. We have found the CPAs toughest challenge is selecting the right outside partner.
Posted by KG Advisors | Monday, November 22 2010 at 3:32PM ET
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