Investors of all ages, and especially Baby Boomers, are increasingly turning to their CPAs to help them grapple with the financial planning challenges they will face leading up to and during retirement.CPAs are often the first financial advisor that investors experience, and with whom they build trust. Since the CPA firm also understands important aspects of their clients' financial picture, a solid foundation already exists for offering the goal-planning and investment advice that today's investors are increasingly seeking.

It is a natural fit for CPA firms, which tend to offer planning services under one of two basic models:

* A structure that offers a separate advisory professional on staff with the appropriate professional designations; or,

* A partnership with affiliated registered investment advisor firms that work with the CPA firm on a referral basis.

One advantage of an on-staff advisor is the ability to offer clients an unbiased viewpoint, whether perceived or real, that recommends appropriate products and services and the right level of risk and return.

There are a number of re-occurring concerns that rank high among the challenges that today's CPA wealth managers are looking to address when servicing the financial planning needs of their clients.

* Top 10 list includes:

1. Managing a solid asset allocation strategy. For a wide range of wealth advisors, creating a solid asset allocation strategy is not an easy task.

An integrated platform that extends a CPA firm's own tax preparation and client management systems by offering portfolio construction and institutional-caliber analytics, and rebalancing capabilities, as well as pre-selected or customized asset allocation models, can automate the process of risk analysis and target asset allocation selection for each client.

2. Evaluating the entire household wealth. One of the most significant difficulties advisors face in satisfying clients' long-term investment management needs is to understand and leverage the entire household financial picture.

More and more wealth advisors are being put to task to not only consider assets in the traditional sense, such as investment accounts, but real property, 401(k) plans and human capital or income derived from one's salary. Liabilities are also an important part of this picture, as credit card debt and mortgage payments can impact the ability of a household to fund future goals.

In the face of our country's current financial crisis, balancing debt reduction and retirement planning has become even more treacherous, especially with mass-affluent clients.

Advisors can overcome this obstacle by incorporating technology for managing all of a household's assets, goals and liabilities in a unified and scalable way as part of their advice delivery strategy.

3. Providing consistent advice delivery across multiple accounts. The ability to offer consistent advice across multiple advisors and accounts can make the difference in running an efficient wealth management practice. By leveraging institutional-caliber analytics and model portfolios to streamline the process of creating investment proposals, technology can help firms achieve great consistency in advice delivery.

4. Identifying clients' risk tolerance. While liability and compliance top the list, there are a variety of reasons that a thorough risk assessment process - which measures risk tolerance, assigns a risk profile via an online questionnaire and includes an audit trail - has become exceedingly crucial.

Advisors often recommend software to automate the proposal generation and portfolio construction process, which not only carefully documents an advisor's evaluation of each investor's risk tolerance, but also the investor's approval of this risk assessment.

Going beyond the scope of the traditional risk questionnaire, however, wealth advisors that undertake a more holistic, balance-sheet approach to investment management are able to create a methodology whereby the complete risk structure is modeled, not just equity and fixed income.

5. Curtailing time-intensive processes. The process of establishing and maintaining client trust is a multi-faceted and complex one. Technology can aid in that process by offering tools that streamline manual and often-disjointed tasks.

For example, the portfolios and accounts of a household can be better managed via a household balance-sheet approach to financial planning and an end-to-end goal-directed platform that give an advisor more insight into the client's entire financial picture.

Likewise, automating rebalancing with technology as part of standard operating procedure helps organizations easily avoid portfolio management missteps and enables advisors to spend more time furthering the advisor/client relationship.

6. Creating a long range cash-flow plan. A household may have the wealth to fulfill all of its goals. However, it may not have the necessary liquidity to meet its liabilities and goals in a timely manner. For many families, there will be a time when the principals are near retirement, the children are entering college and elderly parents may need additional support. All of these events may come together in a period of a few years, posing potential liquidity challenges.

Using a holistic, balance-sheet approach to investing provides the wealth advisor and investor with a more accurate picture of the household's assets, liabilities and goals. Clearly this approach enables investors to better understand their cash flow needs, identify potential liquidity traps, and determine how they can finance their expenses during those critical years.

7. Understanding the effects of taxes and inflation over time. Financial planning has become less and less a linear process, requiring a much more complex approach than identifying a figure and increasing it by inflation. In addition, research shows that affluent and high-net-worth investors likely will face rising tax rates in the coming years.

A key finding of investment researchers is that the investment structure operates as the most important determinant of investment results. In the case of the single account portfolio where the investment structure question is simply an asset allocation decision, the basic finding is that, in typical situations, the investment structure choice determines 90 percent of the investment outcome and that asset selection accounts for 10 percent. In the case of multiple accounts, selecting the investment structure is expected to be an even more critical decision.

Once the investment structure is fixed, proper tax management is the next most important determinant for success. The elements of proper tax management include locating asset classes within the investment structure via a tax-conscious process, selecting tax-efficient assets for taxable accounts, harvesting tax losses diligently, being slow to realize capital gains, and adjusting portfolio exposures in a tax-efficient manner.

8. Ensuring compliance with an IPS. Technology that automates the process of developing a comprehensive investment policy statement as part of the portfolio construction process can make it easier for advisors to help their clients set the stage for long-term decision-making.

Implementing a system that customizes the advisor workflow according to specific guidelines also leaves little to interpretation in terms of how the client's portfolio should be managed.

9. Building a scalable, efficient back office. With Software-as-a-Service applications gaining increasing traction in the market at large, financial institutions and advisors we work with validate the need for highly customizable, Web-based tools that deliver just the right level of functionality. Scaling for growth by leveraging Web-based technology can enable any organization to grow assets and revenue without adding headcount.

10. Attracting and retaining advisors. According to Moss Adams' 2008 study, Financial Performance of Advisory Firms, the advisory industry faces a serious staffing challenge, with nearly all of the largest firms experiencing rapid growth and a need for staff at every level.

More and more organizations are developing comprehensive technology platforms that incorporate tools for enhancing an advisor's ability to streamline advice delivery. Providing tools and resources that are easily deployable to hundreds or thousands of advisors is an important requirement.


When considering the day-to-day business challenges of running a successful advisory practice or addressing the needs of clients, the top question to be answered is how the firm can optimize its business to achieve this goal.

Technology resources that make it easier for firms to address their top challenges can help drive efficiency and set the stage for long-term growth.

Neal Ringquist is president and chief operating officer at Advisor Software Inc., a provider of wealth management solutions for the advisor market. Reach him at

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