The pitch to CPAs is familiar: Why limit your practice revenue to the number of billable hours in the day, when the income potential from leveraging your client base for wealth advisory services is, in theory at least, unlimited?
Moreover, the business itself may be much more intellectually stimulating than routine tax and accounting work, not to mention critical to the long-term financial well-being of your clients.
CPAs appear as receptive as ever to the lure of offering personal financial planning services. But a number of broker/dealer firms, especially those that specifically target CPAs, far from passively waiting for motivated accountants to affiliate, are busy upgrading their services and tools to enable CPAs to achieve success as financial planners.
Why are CPAs such attractive recruits for broker/dealers?
Michael Busch, CPA, CFP and president of Vogel Financial Advisors in Dallas, believes that CPAs’ traditional appeal for broker/dealers is their perennial survey ranking as the “most trusted” financial advisor.
Also, as the ongoing trend in financial planning towards asset-based fee structures continues to strengthen, and as regulators seek to confer fiduciary status on advisors receiving compensation on that basis, CPAs are viewed as a perfect fit.
“CPAs are more process-oriented than product-oriented,” Busch said. “CPAs, raised in a culture of independence, acting more in a fiduciary capacity, are a natural as the industry is moving more to a fee-based investment management approach.”
So for CPAs being wooed by broker/dealers, whether they are new to financial planning or seasoned veterans, there are basically two questions to answer, according to Michael David Schulman, CPA, PFS, of Central Valley, N.Y. “What will they provide for you? And what will they charge you?” he asked.
Schulman has affiliated with several broker/dealers over the years, and is currently a member of the Elmsford, N.Y.-based Fusion Financial Network, which clears securities through NFP Securities Inc. High on Schulman’s broker/dealer selection checklist: compliance services. “I want to be sure everything I do is in compliance with all the regulations.”
For CPAs new to financial planning, regulatory pitfalls specific to the field may not be obvious. Take, for example, client marketing. Schulman knew that when he launched a new Web site for his financial planning practice, it had to be scrutinized by a compliance expert at his broker/dealer, “to make sure everything’s kosher with it.”
“I don’t want to become a compliance expert myself; I have enough compliance issues just being a CPA,” he said.
But robust regulatory compliance services, while essential, may be more of a given now. The areas where broker/dealers — especially those catering to CPAs — are innovating and competing most aggressively today revolve around professional training, client marketing and productivity-boosting paperless administrative systems. “NFP is into paperless; I like that,” said Schulman.
TOO MUCH TO DO
As Roger Ochs, president of Irving, Tex.-based H. D. Vest Financial Services, sees it, the underlying problem is that many of his advisors are victims of their own success. “They have full-time tax practices that have been very successful, and they have successful financial planning practices,” he said. “They’re so busy that they don’t have time to take their business to the next level. They’re trying to figure out how they can continue to be successful in both lines of business, but not be totally burdened by all of the day-to-day stuff.”
H.D. Vest, a non-bank subsidiary of Wells Fargo, was launched 25 years ago by pioneering CPA Herb Vest at a time when public accountants generally were barred by state regulators from earning commissions for selling securities. Today, 47 states have dropped those restrictions. Currently, H.D Vest has about 5,400 affiliated advisors, mostly CPAs.
Ochs noted that during tax season, many CPAs are able to pack their schedules with as many as a dozen client meetings a day. “My comment to them is, ‘Why don’t we build the same processes and systems that you have on the tax side, to see more clients outside of tax season to talk about investment planning and wealth management issues?’”
That message, Ochs said, “is starting to resonate with them.”
Among other things, what it requires, as Schulman suggests, is becoming as paperless as possible. H.D. Vest’s answer is a contact management system, called the “Client Center,” which Ochs said has “automated all our processing, so advisors don’t have to fill out a bunch of forms.”
Ochs is confident advisors will embrace the technology — at least in principle. The issue, he said, is “how they incorporate it into their practice.” To encourage advisors to exploit the Client Center fully, the firm is “building tools and promotions on how to use it in their practice every day,” he explained.
The latest addition to the paperless system is a “remote capture” feature that enables advisors to scan and create electronic versions of “account paperwork” and, in the process, transmit them to the firm for appropriate action and storage, as required by securities regulations. This year, H.D. Vest also plans to add a check-scanning feature that will facilitate immediate check deposits without requiring a trip to the bank.
Ongoing systems enhancements are also part of the value proposition that St. Petersburg, Fla.-based Raymond James Financial Services offers CPAs (and all other financial planners). “We’ve integrated a high-end financial planning system [from developer SunGard] into our back office, so that it’s more intuitive and less of an administrative burden to work with, and integrates with clients’ accounts,” said Mike DiGirolamo, managing director of the firm’s investment advisor unit. “With SunGard, advisors can do an investment policy statement, do an asset allocation. The system ‘talks’ to the rest of the back office, so it automatically pulls in the clients’ assets’ cost basis, things like that, in the development and implementation of a financial plan.”
In addition, the system incorporates the resources of financial market data repository Ibbotson for charts and hypothetical financial scenario illustrations, as well as financial planning tools and a financial encyclopedia. The latter serves both as a research tool for advisors when they need to bone up on a particular financial topic, and as an efficient means of educating clients. “You can cut and paste what you need in your communications; it’s client-ready,” DiGirolamo said.
MARKETING, AND MORE
There’s more, of course, to running a successful financial planning practice than streamlining administrative systems, or grinding out and implementing financial plans efficiently. That’s why this month Schaumburg, Ill.-based Genworth Financial Investment Services is launching a three-pronged practice management solution for its base of approximately 2,400 advisors, some 80 percent of whom are accountants by background.
The three components, according to Genworth vice president of strategic growth Mike Gandet, are:
* Planning your business: A tool to help CPAs establish a vision and basic roadmap to build their financial planning practice.
* Managing your business: Covering client communications, improving client service, harnessing technology and securing administrative support.
* Growing your business: To address the implementation side of financial planning.
Gandet said that Genworth tries to make it as easy as possible for CPA financial planners to stay in close touch with clients to develop the relationship’s full potential.
“Although they have good intentions, most CPA firms don’t execute marketing to their clientele,” he said. Thus Genworth offers “a turnkey, Web-to-print marketing solution that allows our advisors to segment their client base and create themed mailing campaigns appropriate to each demographic.
“All our advisors need to do,” he added, “is manage a database, pick the collateral and theme they want to mail. It’s preset for dates.” Customized messages can be directed, for example, to clients approaching retirement, clients that recently had a child and are thinking about college planning, etc.
Client marketing tools are also an area of emphasis for Dallas-based broker/dealer 1st Global. Client marketing “historically has not been emphasized” within the CPA community, according to vice president of business management services Al Prentice. About 93 percent of 1st Global’s advisors are CPAs, he revealed.
“So what we have done,” he said, “is put together a very comprehensive marketing program made up of dozens of pieces, from seminars to postcards to letters. We’ve overlaid it with our marketing field guide, which shows, step by step, what’s needed, which decisions have to be made, and when.”
Like other broker/dealers, 1st Global has invested heavily in building and enhancing financial planning and administrative systems, including its new online client data system, called IMS Navigator.
And when CPA financial planners begin to turn their sights from helping clients with retirement planning to thinking about their own post-professional lives, they may focus on services like the “business succession model” currently being launched by Genworth Financial.
“This will enable our associates to transition out of their business when they’re ready,” said Gandet. “We’re basically creating a program where we can match buyers and sellers.”
(c) 2008 Accounting Today and SourceMedia, Inc. All Rights Reserved.
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