I have always found regional accounting firms fascinating. Just take three recent developments regarding the regional firm of Virchow, Krause & Company. One was that Wells Fargo Insurance Services of Minnesota, a subsidiary of Wells Fargo & Company, acquired Virchow, Krause & Company's Twin Cities employee benefits operations, including the head of the employee benefits practice in Minneapolis and his team. It is a good example of how regional firms view these very specialized practice areas. The acquire them and spin them off reminding me of many businesses that view the acquisition and the selling of a portion of their business as a regular means for increasing profitability.
The second development is that Virchow Krause Wealth Management reached $1 billion in assets under management. This is just one of many regional accounting firms that has quietly reached that astonishing amount. In fact, there is one regional firm that is approaching $4 billion in assets under management. These numbers are quite remarkable, and show how the client base of these firms supports their wealth management arms. Many of the firm’s wealth management divisions have reached out to other accounting firms to offer wealth management services with the understanding that will be the only service provided to those accounting firm’s clients.
The third development is that the Minneapolis office of Virchow, Krause & Company is named as one of the Minneapolis/St.Paul Business Journal’s “Great Places to Work” based on an evaluation of its policies and the staff’s opinions. Many regional firms have received similar recognition and utilize that along with a learning culture, life/work balance, and paying top salaries to attract top talent and improve staff retention.
Virchow Krause is in no way unique. I could have picked a number of other equally successful regional firms. What all the firms have in common is a business model that has spurred remarkable sustained growth, and allowed them to reach a critical mass so that it has a client base and talent that can support a number of diverse practice areas and affiliates, not just wealth management, but others such as cost segregation or financial staffing. They are also able to offer these diverse services to new clients, including those of other accounting firms.
They are very adept at merging in smaller firms to get needed additional staff and expertise. There is also a keen awareness of business development, marketing, and project management. They quickly take advantage of opportunities, whether it is the heavy “trickling down” of clients from national firms, or capitalizing on Sarbanes-Oxley prohibiting auditors (mainly the Big Four) from providing certain services to the public companies they are auditing.
I can go on about the regional firms, including the great leadership teams and successful internal firm succession, but I’ve got to stop as this column is already almost more than three times longer then Elizabeth Barrett Browning’s poem.
