Tax practitioners who take the plunge into financial planning find that it's a natural step to go from preparing a tax return and answering a client's questions, to tax planning and full-scale financial services."Financial planning has been a nice blend of what I'm already doing for my clients," explained Matawan, N.J.-based CPA Salim Omar.

"The community looks to the accountant for [financial planning], because the accountant really is the most trusted advisor," said Richard Wehrheim, tax partner at RSM McGladrey's Iowa office. He said that many decisions in financial planning are tax-driven, thereby creating efficiencies if they are performed by the same person.

Brea, Calif.-based CPA Rod Clarida finds that simply discussing options with clients opens up opportunities for financial planning. "It may start out with a suggestion that they should open up a Roth IRA, or consider a Section 529 plan for their grandchildren. The same goes for a 401(k) plan. It may be nothing more than telling them they're not putting the max into their 401(k)," he said. "Most of them will say they don't know where it's invested. It allows you to open up a dialog."

"In most cases, if you ask whether their broker gives them advice, they say, 'No.' If you ask them to bring in their list of funds, you can look it over and offer advice. They appreciate the fact that you gave them advice without charging, and it gives them yet more trust and faith in you as an advisor," he said. "With increased choices and portability of retirement vehicles, when a taxpayer leaves a job and asks about rolling his plan into an IRA, there's a good chance he'll want you to manage it."

Although Clarida has the Series 6 and Series 7 licenses that enable him to buy and sell stock and mutual funds for clients, he rarely makes the selections. "There's too much risk in being a stock picker," he said. "By the time I and most brokers find out some information about a company, the market already reflects it in the stock price."


The model followed by multi-disciplinary franchise Fiducial is not tax prep so much as counseling and financial advice, according to tax support manager Andrew Martin.

"We view tax preparation as a necessary evil. The real guts is the write-up and bookkeeping side, but the natural progression is to counseling and advising. We do the work required to provide information to the IRS, but then we work with the client to improve profitability," he said.

Mark Merenda, president of Naples, Fla.-based Smart Marketing, advises his CPA clients to examine the return and note areas of potential loss, then offer solutions to protect clients from the loss. "That's better than telling them that they'll make more money if they take certain steps," he said.

Merenda, who specializes in teaching financial professionals to market themselves, illustrated this with an example of a utilities firm that sent half its customers information packets that said they could save 20 percent a month by insulating their home. It then sent letters to the other half that said they were losing 20 percent a month in bills by not insulating. "The 'losing' letter received four times the response compared to the saving letter," he said.

Merenda is a big believer in the unique position of the CPA to understand a client's financial picture. "Who knows more about a family's finances than the CPA?" he asked. "Families come to rely on them, and owners of businesses come to rely on them, for sound financial advice. It's not much to branch off and talk about investments, insurance, asset protection, annuities and estate planning. It really is a natural step."


Of course, one size does not fit all, especially with regard to high-net-worth clients, according to David Desmarais, a partner in New England regional firm Carlin, Charron & Rosen LLP. He agreed that there is a bridge to financial planning when performing tax prep, but for high-net-worth clients, financial planning is best performed by a team.

"Speaking solely from a Private Client Service Group perspective, financial planning is best performed by the financial advisor working with other professionals - accountants, attorneys, insurance agents, etc. -servicing that same client," he said. "With a variety of high-net-worth clients comes a variety of willingness to take risks and variance in what they need and when they'll need it."

Such a team would include attorneys to identify the ownership structure, accountants to determine the tax efficiencies of the investment vehicles, and investment advisors to determine the appropriate asset allocations based upon their goals and tolerance, Desmarais said.

He noted that in doing recent end-of-year tax planning, in several circumstances he found "items that required a follow-up with other financial advisors, such as clients being in municipals when they're in low tax brackets and suggesting they might be better off in corporate bonds, or asking if there were unrealized losses that could be taken in order to offset already-realized gains."

"I don't consider that, as a tax professional, doing financial planning; rather, I consider that being a trusted advisor to my client working in conjunction with the client's other members of the engagement team to provide the best service possible," Desmarais said.

Merenda agreed with the team approach for higher-end clients, but said that the accountant should be in charge. "The question is, who is the best quarterback to lead the team? The CPA is qualified to bring all of these team members together to give a complete financial picture to the client," he said.

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