Paradigm shifts in the delivery of financial services and products have opened up enormous opportunities for CPAs to take their rightful place as principal financial advisors to their clients.

The remaining large brokerage houses continue to require large production minimums of their retail advisors. Clients want to understand why they are buying financial products and they want to be properly advised, instead of simply being sold the "investments du jour."

An estimated 40 percent of all public accounting firms are now offering some form of financial or wealth management services. CPA firms have been utilizing the traditional model of delivering financial services and products, leading to moderate success. This article is about how my firm achieved a successful and sustainable financial planning practice and developed clients who are raving fans in a relatively short time frame.

Most firms have established their CPA financial service models in the same way that they established their other successful niche practices. A partner was designated as the champion, and that partner who had an appropriate financial planning background was designated to lead the practice.

The problem with this approach is that CPAs have not been trained to be successful financial planners. Financial planners are trained in the art of selling financial services. They know how to sell financial products, including life insurance, and how to deal with objections and rejections. Although there is similar training in the fields of estate planning, income tax planning, deferred compensation and related financial planning fields, CPAs simply do not have the sales and financial product background and knowledge that financial planners develop as they come up through the ranks.

Successful financial planning firms employ successful financial planners. CPAs may be trusted advisors to their clients in the financial planning field, but they are not trained in the techniques that are required to motivate clients to complete their plans and purchase the products that will help them fund those plans. Good financial planners and CPAs are ethical, have integrity and are motivated to help clients achieve their financial objectives, while maintaining objectivity and making a living. However, the integrated effort of the two approaches is more powerful than their independent efforts.

 

OUR APPROACH

In 1999, Florida amended its accountancy statute to allow CPAs to earn commissions and contingent fees. Our firm, Berkowitz Pollack Brant, was working with a financial planning group in South Florida and invited them to form a joint venture called Provenance Wealth Advisors. PWA was formally established in February 2000. Since this time, PWA has grown from $100 million to more than $1.5 billion in assets under management. Our success has been based on referrals from satisfied clients and minimal external marketing. Today Berkowitz Pollack Brant is ranked among the top ten CPA firms with assets under management in the country.

This success is based on a symbiotic culture and a process focused on complete CPA/planner integration. Our collaborative joint culture focuses on comprehensive financial planning for each client. CPAs and planners are involved in every step of the plan and their work and client contact are integrated into the process that is undertaken with each client. A key aspect of the culture is that the CPA/client relationship is protected and enhanced by the planners, and they are trained to make certain that the CPA's role is primary. The planner's role is to assist the client and the CPA in finding appropriate solutions.

 

ENGAGING THE CLIENT

Once we identify a prospective client, we offer a free present-condition analysis. A PCA is a snapshot of the client's current financial situation, including their estate and financial plan, insurance plan, investment portfolio and succession plan. We find that the majority of clients have never looked at all of these subjects in tandem.

Obtaining the information necessary to prepare a PCA is a key aspect of taking a prospect to the next level of becoming a client. Whether it is an existing or new client of the CPA firm or a prospect identified by the financial planning firm, the key is obtaining the necessary financial information to analyze to get a complete and accurate snapshot of the prospect's financial life. Analyzing the information that is provided by a prospect and preparing the PCA truly represents the marketing cost for our firm. Preparing a PCA for a prospect with a seven-figure estate will run about $5,000-$10,000. This substantial commitment is a good investment because a completed PCA will result in the prospect becoming a client in excess of 90 percent of the time.

Once the PCA has been completed and the planner and the CPA have met with the client to review it, we usually see a paradigm shift in understanding the existing plan. The CPA and the financial planner are able to communicate with the client on an entirely enhanced level of understanding. Most of the time the client will understand that their estate plan has not been implemented properly, that it is not what they thought it was, or that it has not accomplished their specific goals.

Prospective clients become clear on what they want to accomplish and are grateful that the issues that have been raised have been brought to their attention. A fee is proposed for an engagement to complete whatever tax and financial planning is required to mitigate the issues that have been identified as problems with the present estate, financial and business succession plan.

 

THE PLANNING PROCESS

Once engaged, the financial planner and the CPA conduct additional fact-finding and gathering of data. They work together to formulate a revised plan that meets the client's objectives and they allocate the responsibilities that each of them will have in executing the case. At the next meeting, the client receives a written comprehensive financial plan that is presented to them in detail by the planner and CPA, who each have pre-determined roles in presenting the plan. The joint presentation is again intended to enhance the central role of the CPA, while allowing the planner time to establish a strong supporting role with the client.

The process of formulating and finalizing the financial plan for the client may take multiple meetings. However, the planner is responsible for making certain that the process stays on course and there is a continuous effort to finalize the plan. The plan is documented with a drafting checklist that has been developed by BPB and PWA. Over time, BPB and PWA have worked with several law firms to create consistent forms that do not change every time, allowing rapid review of documents and a shorter time from initiating the case through execution.

 

COMPLETING THE PLAN

Following execution of the various legal documents, an integrated effort by the CPA and the planner is undertaken to complete all aspects of the client's plan. We follow a checklist to ensure that all assets are retitled and transferred to appropriate entities, and all the necessary documents are executed by all parties. The CPA and the planner make sure that the appropriate compliance is prepared by the CPA firm, and that changes in the client's structure are understood. This is facilitated by a year-end tax and planning meeting with each joint client of the CPA firm and the planning firm.

The coordination, integration and collaboration between the CPA and planner have been choreographed to ensure that the client's objectives have been carefully addressed and, more important, implemented. Our process is fully documented and our people are trained to execute each case the same way. While the upfront investment is great, the resulting consistent success has created raving fans of our clients and a growing financial planning business.

As CPA firms across the country look to deepen relationships and develop new revenue streams, a collaborative approach to helping clients meet their long-term financial plans in difficult and complex economic times is a powerful tool.

Richard A. Berkowitz, JD, CPA, is the founder and managing director of Berkowitz Pollack Brant, a Top 100 Firm with offices in Miami, Ft. Lauderdale and Boca Raton, Fla., as well as chairman of the board of Provenance Wealth Advisors. Reach him at (305) 359-7000 or berkowitz@bpbcpa.com.

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