Whether it's serving clients, expanding its geographic footprint, or building up its service lines, Michigan-based Top 100 Firm Rehmann likes to put its best foot forward - whichever foot that happens to be.

The firm's mantra is, "Be better, not bigger," according to chairman and chief executive officer Steve Kelly, and that philosophy is underpinned by both its strength in a variety of practices, from traditional tax and accounting work to wealth management and corporate investigative services, and its "One Rehmann" approach to client service. The combination gives it the flexibility to pursue its goals for growth and expansion, without sacrificing work quality or client satisfaction.

Rehmann's recent move into Ohio is a perfect example of the strength and adaptability of its model. Having solidified its presence in its home market of Michigan, the firm decided a few years ago that it was ready to move into the neighboring state.

"Through the years we've always had some push from our partners to look to other states, and we just always said we're not ready until we make more progress and impact in Michigan," Kelly said. "Until we get to where we want to be and need to be there, we're going to stick to Michigan, and, well, we feel we've done that, and that we've made tremendous headway in the state, and we found that we have a really good story to tell."

It began the expansion with a splash, through a series of major acquisitions over the course of 2010. Expansion through acquisition is not unusual, of course; what made Rehmann's move different was that all the acquired firms were primarily oriented toward financial planning, and the move was spearheaded by Rehmann Financial, the firm's fast-growing wealth management arm, in a reversal of the standard CPA firm model of leading with tax and accounting.

 

FINANCIAL IN THE LEAD

Having Rehmann Financial lead the way "was our decision up front," Kelly explained. "Because the opportunities are so ripe now on the wealth management side, we decided to lead with that, and then move on to the CPA space."

"We put the financial services element out there first, which normally we don't do," said Rehmann Financial president Fred Schaard. He noted, though, that the three acquisitions that were the firm's first steps into Ohio were all in the suburbs of Cleveland, and thus within two-to-two-and-a-half hours of Rehmann offices in Farmington Hills and Ann Arbor, Mich. - so the firm could serve Ohio clients' tax and accounting needs from there, if necessary.

"We scrubbed through over 100 potential advisors and met with 18," Schaard explained, "and the three that we decided to merge in all had distinct characteristics that would enhance not simply just assets and revenue, but specializations and services that we felt would make us stronger coming in."

Pension Builders, for instance, brought sophisticated services in the pension arena, while Kotter Advisory Services offered high-level insurance expertise. Between those two and the January 2010 merging in of Dawson Wealth Management, Rehmann Financial notched up approximately $2.1 billion in assets under management (which includes AUM under its registered investment advisor, as well as assets under advisement in its broker/dealer). That figure was due to increase by almost half, to $3.2 billion, through a merger with Ohio-based Hylant Financial, which took place in January. Staff joining Rehmann Financial from Hylant will bring the unit's head count to just over 100, with about a quarter of those working in its pension administration division.

Rehmann Financial is no stranger to strong growth, having started with approximately $50 million in AUM in 2000, when the firm started "dabbling" in financial planning. After consulting with the firm for two years, Schaard, who had built a number of planning practices for different organizations, including one of his own, merged his practice into Rehmann in 2003, with the condition that the financial planning business unit be built out "properly" - "I defined properly as building a business unit that was comprised of not just a bunch of advisors trying to get referrals off of CPAs," he said, "because that has limited growth potential."

Schaard's ideas were in step with those of Kelly, who joined Rehmann a year out of college in 1974, and has been CEO since 1985. He noted that with a lot of CPA firms that move into financial planning, "They have their accounting firm, and then over here on the side they have their financial practice, and it doesn't work well. With us, we can't be the firm we want to be if we don't offer financial services. We can't be the firm we want to be if we don't offer audit services, or if we don't offer tax services - they're no different. It's a service to a client."

And at Rehmann, client service is a very high priority.

 

'ONE REHMANN'

Though the firm has always placed an emphasis on client service, it didn't achieve its current levels until it began to formulate the approach that it now calls "One Rehmann."

"We weren't getting to the level where we felt we needed to be," Kelly said. "We were good, we were up there, but the clients who were historically most satisfied, the 'blown-away' category, were those who were being served by a large group of Rehmann people, and had direct contact with each of those Rehmann people, as opposed to the partner-in-charge, the gatekeeper. The accounts with the gatekeeper, where everything had to funnel through that small opening, those clients didn't receive the Rehmann experience. They would say, 'I'm really pleased with my partner, but not so much with Rehmann.'"

In response, the firm took a team-oriented approach - presenting each client with a team, each member of which has direct access to the client and all of the client information, with a mandate to be pro-active in serving that client. Rehmann also created the post of "client ambassador."

"It's their responsibility to just keep in touch with the client, and ask, 'How are we doing?'" Kelly said. "We found that by formalizing that process, and guaranteeing that we have someone regularly inquiring of the client, 'How are we doing? What do you want? What do you want more of?' client satisfaction soars and opportunities for us soar."

Before it could soar, though, the firm's staff had to buy into it, which was not easy at first, since the approach is, in accounting parlance, more principles-based than rules-based. When One Rehmann was first rolled out in 2008, Kelly said, "People were confused, saying, 'What is One Rehmann? Tell me how do it. Give me marching orders.' So as it evolved, we said, 'Let's not focus on the how, but focus on here's what we want to measure. So now you creatively do that, as opposed to we'll have a session and tell you how to do that.'"

The firm did develop tools such as questionnaires and forms to help teams measure their implementation, but what really helped the strategy gain momentum was when early adopters started sharing success stories. "Those reports are very specific," Kelly explained. "Here's the client, here's where we were, here's the team we presented, here's what resulted. We'd have five reports, and each took a completely different approach, but in the end they presented a team, they were being pro-active and they were talking to the client, and it works."

Constant reinforcement from management helped embed the strategy in the firm. "I would say that we have fully penetrated the attitude of all the CPAs and financial people to interact with the One Rehmann approach," Schaard said. "It's something that is demanded of them, so we're looking at how they're comped and rewarded for their efforts. We're looking at not just what did you produce financially, but did you really interact in the manner that we're trying to present ourselves to the public as far as a full-service offering. We're looking at everyone and saying, 'Are you delivering a One Rehmann approach?'"

"It's a very big part of everyone's evaluation," Kelly added. "Of course, everything's important - metrics, and how you treat associates, and so on - but at the top of the list is One Rehmann."

While both Kelly and Schaard are adamant that One Rehmann is not about cross-selling - "We don't want anyone selling anything," Kelly said - introducing clients to staff members from different practice areas certainly puts the firm in a better position to sell more services. "This last year especially, 2010 and most of 2009, we've seen tremendous opportunities with existing clients and new clientele walking in the door, saying, 'We're really looking for this,''' Schaard said. He estimated that the firm has penetrated approximately 15 percent of its clients with full integration, rising to 30 percent if you exclude audit clients who are conflicted out by Sarbanes-Oxley rules.

 

NEXT STEPS

With its unique client service approach, a growing line of services, and an aggressive M&A strategy, Rehmann is predicting a strong 2011, budgeting for $95 million in revenue, up from an estimated $80 million in 2010. $20 million of that is budgeted for Rehmann Financial, $5 million for its recently expanded Corporate Investigative Services unit (see 'Better and bigger' at left), and the rest from the CPA side. In the future, Kelly noted, "We think the long-term optimal blend is that the wealth management and the accounting firm revenue would be about equal."

For the moment, though, the firm's short-term plans are to consolidate the gains it has made thus far. For Rehmann Financial, Schaard said, "We're really looking at shoring up the tremendous growth that occurred and kind of back-filling with advisors." That will mean making sure the financial side is fully represented in the few Rehmann offices where it currently isn't, in both Michigan and in Florida, where the firm has established three offices over the past three years. Schaard expects the unit's greatest growth over the next three years to come in the retirement plan arena.

For the firm as a whole, "We've got some financial digesting to do," Kelly said, "but on the other hand, we'll be looking aggressively on the CPA side, both in Ohio and Florida," for firms that fit its culture and complement its expansion strategy and service offerings.

It will also work on developing its practice area in receivership, where the firm had some new engagements in 2010. "We're battling in this economy like everybody else," Kelly said, "and we're working harder and doing more for less in many cases with clients in this market. We've specifically seen this with the large client competition with other regional firms here in Michigan. It is really, really competitive."

"Our focus is going to be on the better, not bigger," he added. "Let's drive One Rehmann, let's integrate everything we have." AT

Historically, Rehmann's growth has been about 60 percent organic and 40 percent from mergers and acquisitions, but that figure can be significantly skewed when the firm's M&A engine is running hot - and in 2010 it was running red hot. Besides a number of mergers in Ohio and Michigan that built up its financial and accounting sides, in July 2010 the firm created its new Rehmann Corporate Investigative Services division by merging Veritas Global in with its already established Kerby, Bailey & Associates unit.

Veritas was established in 2005 by former members of the Federal Bureau of Investigation, the Secret Service and the intelligence services to provide risk analysis and management, due diligence, and investigative services.

"We became acquainted via a mutual party, and the relationship just kind of took off from there," said Greg Suhajda, who was president and CEO of Veritas, and is now president of Rehmann CIS. "There were synergies, and our personalities meshed perfectly on a lot of fronts. The more people I met, the more I liked the firm."

In particular, Suhajda was drawn by Kerby & Bailey's capabilities in IT forensics and its large insurance defense group. Now with a staff of more than 40, the CIS unit offers a wide range of services, including corporate investigations in areas such as fraud and embezzlement; asset searches; computer security testing and consulting; risk and vulnerability assessments; high-end background checks, and background check system assessments; and customized geopolitical risk assessments.

Of the merger, Rehmann CEO Steve Kelly said, "It took it to a new level. Their client list was a who's who, and very large clients. The sophistication level of their services really enhanced what we have. They do a lot of international work and worldwide asset searches and all kinds of really neat things for wealthy clients and for large businesses."

Veritas was involved in much the same client base as Rehmann, working heavily with financial institutions, the medical field, the hedge fund/private equity area, and large international companies, so it was a natural fit. And in keeping with the "One Rehmann" approach, Suhajda noted, "We educate people within, and then they become ambassadors for us with their clients."

"We're very new," he noted, "but we've been taking off like gangbusters, and it's been busier than anyone could have imagined."

 

 

Better and Bigger

Historically, Rehmann’s growth has been about 60 percent organic and 40 percent from mergers and acquisitions, but that figure can be significantly skewed when the firm’s M&A engine is running hot — and in 2010 it was running red hot. Besides a number of mergers in Ohio and Michigan that built up its financial and accounting sides, in July 2010 the firm created its new Rehmann Corporate Investigative Services division by merging Veritas Global in with its already established Kerby, Bailey & Associates unit.

Veritas was established in 2005 by former members of the Federal Bureau of Investigation, the Secret Service and the intelligence services to provide risk analysis and management, due diligence, and investigative services.

“We became acquainted via a mutual party, and the relationship just kind of took off from there,� said Greg Suhajda, who was president and CEO of Veritas, and is now president of Rehmann CIS. “There were synergies, and our personalities meshed perfectly on a lot of fronts. The more people I met, the more I liked the firm.�

In particular, Suhajda was drawn by Kerby & Bailey’s capabilities in IT for­ensics and its large insurance defense group. Now with a staff of more than 40, the CIS unit offers a wide range of services, including corporate investigations in areas such as fraud and embezzlement; asset searches; computer security testing and consulting; risk and vulnerability assessments; high-end background checks, and background check system assessments; and customized geopolitical risk assessments.

Of the merger, Rehmann CEO Steve Kelly said, “It took it to a new level. Their client list was a who’s who, and very large clients. The sophistication level of their services really enhanced what we have. They do a lot of international work and worldwide asset searches and all kinds of really neat things for wealthy clients and for large businesses.�

Veritas was involved in much the same client base as Rehmann, working heavily with financial institutions, the medical field, the hedge fund/private equity area, and large international companies, so it was a natural fit. And in keeping with the “One Rehmann� approach, Suhajda noted, “We educate people within, and then they become ambassadors for us with their clients.�

“We’re very new,� he noted, “but we’ve been taking off like gangbusters, and it’s been busier than anyone could have imagined.�

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