by Jay N. Nisberg and Tony Wood

Both the financial advisory services and accounting industries continue to undergo significant change.

Product delivery models for the financial services product manufacturers and distributors are going through major evaluation and transformation. Competition for the client’s dollars is creating the need for more aggressive, focused marketing and brand-building. The collegial environment that existed for so many years is now mostly gone.

The challenge for financial institutions is how to retain producers, how to keep clients and how to develop better distribution strategies. One major strategy to bring solutions to these challenges is collaboration. Does the industry still believe collaboration with other professions, such as CPAs, is and will continue to be one of the most important initiatives for financial service firms in the future?

As a parallel to the financial services industry, the accounting profession is challenged as well. Industry leaders continue to encourage CPAs to take a broader role in their clients’ financial affairs. Even the CPA client is demanding more than just tax and accounting advice. CPAs are also pressured to diversify their revenue stream beyond their traditional services as the competitive arena continues to grow and firms must distinguish themselves.

Seeing this, professionals in both industries have been drawn to collaborate — not only to meet their own needs for sustainability, but to meet the demands of their clients. However, experience is proving that this is easier said than done. While a great deal of effort and money has been spent attempting to develop this collaboration model, there has been only limited success. This experience has prompted many to ask: Is the CPA still a viable market for financial services distribution?

A recent history
To properly and accurately assess this opportunity, one must look at how both industries have executed on this initiative and evaluate and learn from recent history and statistics.

First, while manufacturers and broker/dealers were quick to respond, the education, training and practice model fell woefully short and didn’t provide the advisor with the level of success that they expected or the ability to align and work with CPAs.

They did not understand the CPA service-for-fee model, as it is diametrically opposed to the up-front commission model that has been part of the advisor culture for so many years. The pure product sale does not work in this market.

Second, the direct model, where the CPA is licensed with a broker/dealer and provides all solutions with no outside help, has also met with varying degrees of success. With this model, CPAs are expected to do everything themselves in providing all the services to their clients.

Though they understood and could relate to the service needed, like the advisor, they also were not provided the necessary tools. For many, this approach has the added challenges related to their identity of being a CPA, their credo of objectivity and the time conflicts with their CPA practice.

Hows and whys of success
Despite the challenges and missteps, there have also been great success stories. Many CPA firms are generating financial services revenue in excess of 10 percent to 20 percent of gross billings.

Recent studies from Prince and Associates conducted from 2000 through 2002 reveal some interesting facts.

For those CPA firms that have successfully entered the financial services field, a number of critical success factors have emerged. They are:


  • Having partners identify prospects for the financial services practice;
  • Creating strategic alliances with experts in life insurance and investment services;
  • Being able to access financial services professionals on a case-by-case basis;
  • Developing a detailed business and marketing plan for the offering;
  • Committing the necessary resources to the financial services practice;
  • Providing a compensation system that promotes cross-selling of financial services; and,
  • Having all partners committed to the financial services practice.

Firms that had entered, but then exited, the financial services business did so for three primary reasons.

  • The firm was never really committed to the business;
  • Implementation was problematic because there was no “change” champion among the partners; and,
  • There were conflicts with the firms financial services provider(s).

CPA firms trying to decide whether or when to enter the financial services arena have firms with successful models and benchmarks as an example for study and emulation.In addition, of both individual and small business prospects surveyed, an average of over 60 percent responded in favor of obtaining financial products from their CPA, while 75 percent responded specifically in favor of insurance products. It must also be emphasized that only 10 percent of the surveyed CPA firms are doing so.
The opportunity is still largely untapped. Clients understand the connection between life insurance and tax issues. From deferred compensation to estate planning, taxes play a major role in addressing problems and solutions in these areas. Based on their consultative history and trusted relationship, clients are more comfortable when their CPA becomes involved in the delivery of these products.

More statistics from Prince and Associates, along with a review of market conditions, support the notion that the CPA market is viable. For those CPAs who want to engage in financial services, they want to do so for all the right reasons. This is important for sustaining any level of success.


  • 77 percent want to better serve their clients.
  • 65 percent want increased revenue.
  • 61 percent want to relieve competitive pressures.
  • 37 percent want to grow their business.
  • 29 percent fear losing clients otherwise.

Probably the most important factor of all is the marketplace: The client and the issue of client satisfaction. In 2000, Prince and Associates found that the following was a useful metric in predicting future client behavior and buying preferences.First, there is the level of satisfaction with the financial services obtained from their accountant.

  • 90 percent were satisfied with the quality of products.
  • 84 percent were satisfied with the level of service.

Second was the likelihood of future purchases of financial products or advice from their accountant.

  • 92 percent would obtain more products from their accountant.
  • 84 percent would refer others to their accountant for financial services.

Yes, the market is still viable, but there needs to be a focus on what the professionals in this collaborative model really need.Advisors today know that the way they did business over the past 50 years won’t work for the next 50 years. The Undiscovered Managers Report of September 2000 said, “A tidal wave of changes will completely reshape the advisory business. A hostile, competitive environment will emerge for clients. Successful participants will focus their resources on capturing and retaining those clients.”
Margins are compressing, first-year commissions and renewals dropping and the servicing needs are increasing due to product complexity and client demands. Consequently, the need for change and transformation is required for sustainability. This can be achieved, but not by accident. Advisors need to develop the following traits as niche specialists:


  • The perception of special expertise to solve the most complex problems;
  • Continuous improvement of quality of service;
  • The ability to anticipate clients’ future problems;
  • Highly efficient operating structures, including leveraging from key alliance and partnerships providing more comprehensive solutions to clients; and,
  • A dominant share of the market for their special expertise.

Partnering with CPAs and other professionals will meet many of these needs and help transform the advisor’ practice. Institutions that support their advisors must invest in education and training in practice management and marketing at the advisor level like never before.Empowering the CPA
The American Institute of CPAs Vision Project 2011 states that financial planning is among the top five services that CPAs felt were most important to enhance their practices. In a recent survey commissioned by the AICPA, 48.8 percent, or the equivalent of 172,669 members, recommended or advised their clients on a variety of financial products and services within the past 12 months.

Surveys continue to confirm that there are a number of valid reasons for accounting professionals to provide financial services. Which path these professionals decide to take when offering financial services is a critical decision.

In order to maintain independence, protect objectivity, preserve clients’ trust and retain the integrity of this valued profession, the services must be delivered through a financial planning platform and delivered with a high degree of competence.


Jay Nisberg, Ph.D.,a leading consultant to the accounting profession for three decades, has been involved with the Professionals Alliance Group initiative from its inception. Reach him at (203) 743-2567 or jaynisberg@snet.net. Tony Wood has been a consultant to both the financial services industry and the accounting profession since 1993. Reach him at (954) 615-5657 or twood@anthonywoodconsulting.com.

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