CPAs are brilliantly positioned to become successful and profitable wealth managers, yet they often face barriers that, without proper planning, can keep them from taking the necessary steps to create an additional profit center. Properly addressed, these challenges can be effectively managed and CPA-affiliated investment advisor practices can be successfully launched.
The following challenges can sidetrack even the most enthusiastic champion. However, it is important to remember that other firms have faced similar issues and successfully resolved them.
1. We don't have time. If your CPA firm is thriving, you might think that there isn't enough time to properly implement a comprehensive plan. A true understanding of the mid- and long-range revenue opportunities for a successful registered investment advisor firm can shift that thinking. Proper initial planning is critical. The plan must include the designation of an internal champion who is currently available or has a clear path to become available to execute your plan. It there is no internal option, hire an outside champion.
2. What about conflict of interest? Some argue that there is a conflict of interest related to compensation when CPA-affiliated RIA firms offer investment advisory services. As a fee-only RIA, you are not only committing yourself and your advisors to a fiduciary relationship with your clients, but clearly aligning your interests with theirs.
3. We haven't established our advisor knowledge base. Becoming a knowledgeable investment advisor need not happen in a vacuum; numerous resources exist to assist you. The right outsourcing partner should provide access to proper training. BAM Advisor Services, for example, offers a comprehensive, customized training program for each firm.
4. We don't have robust partner support. It is critical that all partners are properly educated about short-term changes and long-term objectives. Begin developing key partner support early and continue to communicate to all partners the business and marketing plans, ongoing benefits for the CPA firm, and key milestones being achieved.
5. What if we lose current accounting clients due to poor market performance? Statistical evidence indicates that losing clients for this reason is less likely to occur than advisors might expect. Our BAM firms have also found that not only do very few of their affluent clients switch advisors due to poor investment performance, but losing CPA clients due to poor performance is nearly unheard of. It is more likely that clients' satisfaction with the investment advisor firm helps anchor their relationship with you and your partners.
6. We don't want to compromise relationships with current referral sources. In our experience, gaining valued clients that fit your ideal profile and acting in their best interest has resulted in fruitful referral sources for both of your businesses. Many advisors see an increase in referrals coming from current clients who want you to help their friends and family.
Your clients need a trusted financial advisor now more than ever. By overcoming these common barriers, firms can successfully launch highly profitable, client-focused RIAs. Client relationships are enriched and a valuable asset can be created for the owners of the new entity.
Mont Levy, JD, is chief executive of BAM Advisor Services LLC (www.bamadvisorservices.com), a turnkey service provider for independent and CPA-associated RIA firms nationwide.
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