Fostering post-tax season growth in wealth management

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Many accounting firms get so busy during tax season that their wealth management division may slow down somewhat. Let me be the first to tell you that the slowdown is not only optional, it is clearly not optimal and a sign of weak leadership. Conversely, at the time when you’re meeting face to face and communicating heavily with your best clients is the ideal time to talk about any issues beyond taxes that you may have noticed in the course of preparing their year-end financial information and tax returns.

There are two sides to this post-tax season effort: the administrative side and the client service side.

Starting with the client side, the first order of business is to debrief on tax season. I’m hoping that you’ll take on this project seriously and not casually. To be serious, you need to bring some information to the meeting. Simple stuff, like the numbers of family-based engagements that the firm has helped. Include 1040s, trust work or closely held entity-related work.

Have the rankings in order of best to worst and include fee information and net realization to the extent that you can produce it. I’d also add a qualitative bucket ranging from fun to work with, through to the clients that your staff wants to hide from. The latter rarely make for great wealth management clients.

Next, use your technology to fetch data on some of the more telling fields like income, and Schedule A, B, C and D, then rank those who may have the most going on and thereby possibly have more gaps and need oversight and coordination. Each partner should then meet with the wealth management leader to discuss the findings related to their specific clients, possible gaps, and a potential course of action.

At this point, many partners fail. It’s easy for them to say, “Oh no, not this client. I referred them to XYZ firm who’s also a substantial referral source for me.” I understand that you don’t want to step on toes of who you’ve introduced to your client, but are you equally content letting notable gaps in their financial plan exist while they are your tax client? Hopefully, the answer is no. Now let me explain how you may want to handle it with your client’s primary advisor.

A phone call to the advisor, noting that you’ve spotted several gaps in your mutual client’s financial life and want to talk about it, is your best start. If you haven’t cleared this collaboration with your client first, please do so and let them know why. It’s distinctly possible that, like many, the advisor gave lip service to financial planning, managing money, or selling insurance and they don’t really care about the gaps. Don’t think this judgment is too harsh. If the incumbent advisor, regardless of how they were introduced to your client, hasn’t spotted these gaps and offered to be a part of the solution, shame on them.

This may be a financial planning opportunity for your firm. For the most part, your better clients are willing to pay your hourly rate or flat fees for advice that isn’t asset management-related. In fact, if you read this column often you know that I’m not hiding the fact that comprehensive and proactive wealth management beyond investments is key to building and maintaining irreplaceable long-term relationships.

Start the conversation

After you’ve come up with your list of clients with possible gaps, it’s time to reach out. This second step is the most critical and should be done as soon after tax season as practical. The longer you wait, the less impact your message may have. The reach out isn’t rocket science; it’s simply your chance to prove that you’re more than an after-the-fact accountant. Look to add value to the services that they receive from your firm.

Your conversation can be as simple as, “We saw a few things in the course of preparing this year’s taxes that we’d like to talk to you about.” A naturally inquisitive client will ask, “What type of things?” Be prepared to answer with some of the gaps that you’ve spotted. It may be best not to get into too much detail over the phone and encourage a meeting so you can go down the entire list.

At the point of meeting, it would be ideal to have the accounting firm partner and the wealth management partner present. Sometimes the accounting partner will feel as if they are dishing the client off to a new relationship. While it may be a new person presented to the service team, it is another partner at your firm and should be introduced as the partner-in-charge of the financial planning relationship.

The accounting partner’s role in the engagement will change in each circumstance, but in general it’s safe to say that the accounting partner’s role will be no different than before. You’ll support the planning process and be involved in business and tax issues as needed and directed by the wealth management partner.

The last part about completing the engagement is to keep the lines of communication open. This isn’t as easy as it sounds. The accounting partners understand time management and net realization rate, and therefore should understand that most engagements cannot be priced high enough to include two partners doing or overseeing everything.

This can be done efficiently by good use of a CRM system where the accounting partner can log in at any time and see what has transpired, or the accounting partners can be copied on all correspondence with the client, written and electronic.

Behind the scenes

The administrative side of growing from your tax season efforts is also important. I’d start this with your marketing and communications plan. It’s possible that your financial planning division went dormant during tax season because it is still a well-kept secret. If you’re not sending regular financial planning newsletters or maintaining a section of your website dedicated to financial planning — do it.

While your website on its own isn’t likely to generate wealth management clients, it is a destination for those checking you out. Clients, prospects, web surfers and other professionals with a relationship to your firm are all likely to see the website. Keep the site current and publish frequently so that your site is kept fresh and desirable for return visitors. Marketing surveys still suggest that high-net-worth clients check you out and corroborate their findings many times before actually engaging with you.

As basic as it sounds, make sure that the name of your wealth management division is on the door and prominently displayed in places where clients may visit. “Out of sight, out of mind” is true for clients and staff alike. If clients are regularly seeing evidence of a vibrant, successful division, they will eventually be curious and start to ask what you can do for them. Staff members are your front lines of client service and a good source for issue recognition throughout the year. Your staff should be sharpshooters when it comes to spotting gaps in a client’s financial plans.

Training for partners and staff is helpful. The technical issue recognition training, which can be CPE-eligible, is important, regardless of the experience of the attendee. Over the years, I’ve whittled down the course that I developed for many state and national societies of CPAs from eight hours to one or two. If your managing partner is not willing to hold this training, I would once again suggest that the firm may suffer from a leadership problem.

This is a good time to evaluate your service model. Are you suffering from an older affiliation with a third party? Are you still dealing with FINRA and commission-based issues that can go away if you adopt a pure fiduciary model? Does your wealth management business get bogged down by complexity or compliance issues? Does your wealth management staff meet the standards and needs for your best clients? Are you your own registered investment advisory firm or part of someone else’s? Are your staffing and compensation methods consistent with the top tier of wealth management firms? Are you providing a career track for employees where they can clearly see themselves spending their entire career with your firm? Does the wealth management division have a clear path toward partnership for the superstar wealth managers that you’ll hopefully develop?

And last, but certainly not least on the list of things to focus on after tax season — compliance. Compliance as a financial planning professional is getting more difficult each year. As the regulators manage to the lowest common denominator, the minutiae that you’ll be forced to track and monitor will only increase every year for the rest of your life. Invest in the systems, people and processes to make compliance a strong part of your culture and to make the next visit of the Securities and Exchange Commission just like any other day at the office.

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Wealth management Financial planning Tax planning