[IMGCAP(1)]Crisis, what crisis? That’s what some financial planners are saying as they look back to 2010. But for many other financial planers, the landscape of their financial planning practice has changed forever—some for better and some for worse.


Those who suffered most were frequently practitioners who called themselves financial planners, but the service they delivered was hardly proactive and holistic financial planning. It was a financial planning façade fueled by money management revenues. For some reason, even CPA financial planners have fallen into the trap that leaves planning on the sidelines with assets under management and total returns the driver of the client/planner relationship. This type of advisor was hit the hardest from the financial calamities of 2008 and 2009.

The obvious pain came from the drop in account values. Most asset-based financial advisors saw their income take as much as a 40 percent hit to top-line revenues unless their client portfolios were invested in all cash or other nonvolatile positions. Any company asked to skillfully operate their business and provide top-quality service to clients with a 40 percent drop in gross revenue will show signs of stress. Many of these firms had to re-work their model, trim staff, focus more on outsourcing tasks, and scramble to find new clients to replace the lost income.

For practitioners who only practice financial planning, these practice saving or enhancing modifications were easier than for the CPA financial planner. Easy in the sense that if you did not make some serious changes, your survival was in peril. So I guess the word necessary could be substituted for easy.

But for CPAs who also practice financial planning, I’m sorry to say that many crawled back into the cocoon of billable hours and hid from clients, hoping that this would pass as quickly as possible. Firms by the dozens shut down their financial planning divisions, merged, sold or otherwise handed off the work and client service to someone else. These practitioners went back to work they can count on… debits, credits, peer review and tax returns—a big mistake.

In the middle of the crisis, clients were looking for a life raft. People were anxious, scared and looking for direction. Those financial planners who rose to the occasion and became that leader for their clients retained and even enhanced many of their client relationships.

They addressed this crisis from the financial planner’s perspective, and worked through the planning consequences of an economic meltdown with their clients. They reworked forecasts and projections to reflect lower account values.

Their financial planner showed them ways to save money on insurance, and focused on how much worse things could get if the proper coverage was not in place for home, auto, liability, life, disability and long term care. They took advantage of lower account values to discuss the merits of a Roth conversion, to step up their estate plan and to utilize the lower interest rates for all of the good things that low rates can bring to one’s personal finances.

These planners who withstood the financial crisis like seasoned veterans also focused on what many CPAs refer to as the “soft side” of financial planning. I call it life planning. Making your clients’ life goals and personal vision for the future as the No. 1 priority put all this financial crisis stuff in perspective, and brought a smile to their faces when they needed it most. The exercise of dealing with lower account values was just that, an exercise to see what has to be done to get their goals and vision back on track.

During the crisis, many CPA financial planners also came to realize just how immaterial their financial services practice was to the whole of the firm. The financial side of the practice was immaterial in terms of both client penetration and revenues. For some firms, this again led them to the exit door. For those who were more focused on delivering better client service while enhancing firm revenues and value, the crisis indeed presented an opportunity to grow the business.

Clients did not discriminate with their unhappiness. Firm clients who were also working with a brokerage firm, insurance agent or another financial planner were also looking for a voice of reason and guidance from someone they trusted. While many clients had that “deer in the headlights” fear during the crisis, the velocity of change and willingness to change has increased rapidly since the crisis.

From this grew the awareness that it is not appropriate to have the financial planning practice as the best kept secret in the firm. Practitioners learned that if clients had been aware of the firm’s capabilities, many of them would have indeed hired the firm to replace their existing providers. Marketing and communication then emerged as a critical component to advance the financial planning practice.

I’m not talking about radio, TV or direct mail advertising. I’m talking about the simple task of making sure that every client knows about your firm’s financial planning capabilities, and that you want to do it for them. This can be accomplished through newsletters, Web sites, client events, brochures, and most importantly—your behavior.

Having the best marketing and communications plan in the world will not make clients happy or grow your financial planning business by itself. It is your sincere interest in performing these services for them that will make the practice great, and that happens best when you are face to face or speaking on the phone.

While financial planning is still a very fast-growing service, it is not like the “service of dreams.” It takes more than your simply building the financial planning division for them to come and use it. There is no substitute for looking your client in the eye and explaining how you can help get their entire financial house in order, and help them keep it that way regardless of what happens in the markets or economy.

Beyond client awareness of your financial planning capabilities, your allied professionals or other referral sources need to be aware as well. Having the most prominent attorney in town introduce you as one of the best accountants that they work with will not do anything for your financial planning practice. As with clients, these allied professionals should also be recipients of your written message, and be offered the service by you. A noble goal would be to have all referral sources see you as a CPA financial planner, opening the door for more comprehensive service for all new clients from the inception of the relationship.

Many experts see the consolidation of the accounting industry as a permanent trend emanating from the crisis. Fees for many firms are down and pressure on billings doesn’t look like it will ease any time soon. In general, firms that dabble in a particular service are being encouraged to focus or stop dabbling. This is true for financial planning as well as it is true for audit and review services. And because of these trends, practitioners not thrilled with peer review and the direction of attestation services are choosing financial planning as one of their core services.

There are no hard statistics on just how many CPA firms offer financial planning. Just because someone is licensed and their firm has a financial planning division does not mean that this division is vibrant and profitable.

It is safe to say, however, that there are fewer CPA firms practicing financial planning today than there were four years ago. I again see this as an opportunity. Just like the early financial planning adopters who grew all sides of their practices because of the financial planning services they offered, firms that proudly offer financial planning as a core part of their overall offerings are beginning to differentiate themselves, and grow again.

The realization of firms succeeding in financial planning is that you will not cause the death of your accounting practice when a bear market rules. Sure, some clients will be unhappy with the route that you’ve recommended for them, but most will understand that this stuff happens if you focus on financial planning and educate them about volatility and risk when the financial planning relationship begins.

The next step to success as a CPA financial planner is very clear. Let planning, offered proactively and holistically, rule what you do for clients. Don’t fake it as a superstar money manager. Even if you are that superstar money manager, make sure that the clients’ dreams and visions comprise the center of a holistic planning relationship.

Do not let this tax season go by without an effort to have every client and allied professional know about the financial planning services you offer. If a client chooses not to engage your firm for planning services, ask yourself how well this client fits with your firm’s ideal client profile. If there is not a good fit, consider purging this client from your client list.

If you pay attention to the world news, you know that the next crisis may only be a keystroke away from happening. Only you have the unique advantage of the accounting or tax relationship with the client. Decide now how you want your firm positioned to help clients with their most significant issues before the next crises arises.

John P. Napolitano, CFP, CPA, PFS, MST, RLP, is chairman and CEO of U.S. Wealth Management, based in Braintree, Mass.

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