Many accounting firms find that a small fraction of their clients drive the bulk of their revenue, while a large portion contributes relatively little beyond an annual tax return.
For many CPAs, this dynamic is simply accepted as part of the business. A significant share of clients, often W-2 earners, require little more than basic compliance work. Their returns are prepared, filed and invoiced, typically for fees in the range of $500 to $800. Yet despite their modest contribution to revenue, these clients can consume a disproportionate amount of time and attention. They ask questions, miss deadlines, require follow-up and occasionally introduce complications that extend well beyond the scope of a simple return.
The instinctive response might be to reduce or eliminate these relationships. But there is another, more strategic option: to increase their value by introducing financial planning into the mix.
Under this construct, marginal clients can be repositioned as opportunities into clients who, with the right approach, can evolve into more meaningful and profitable relationships. It's important to remember that even clients who seek out just tax return preparation may have a large and complex financial picture. These clients may be able to save thousands in taxes and prepare for a better future with the introduction of even the most rudimentary financial planning.
A natural extension of the CPA's role
The connection between tax and wealth management is fundamental. Every financial decision a client makes has tax consequences, and their taxes influence future financial decisions. This dynamic places CPAs in an advantageous position. They are not outsiders introducing a new and unrelated service; they are already central to the financial lives of their clients.
Yet despite this natural alignment, many accounting firms stop short of engaging in broader financial conversations, whether due to time constraints or regulatory concerns.
This is understandable. The accounting profession is conservative by nature, as it should be. There is a natural reluctance to expose valued clients to a service that is outside of their sphere of expertise. Still, not directing the appropriate clients to financial planning is a missed opportunity, not only for the firm but for the client as well.
Consider the typical mid-income client, with a household earning between $200,000 and $400,000 annually. Their income is straightforward, derived primarily from wages. As a result, they engage in little proactive tax planning. Their focus is on filing accurately and on time, not on tax optimization.
At the same time, these clients often maintain investment accounts outside of their employment. And when their 1099s arrive, they can bring unwelcome surprises, capital gains distributions that generate additional tax liabilities of $5,000, $10,000 or more, which may elicit frustration and confusion.
From a CPA's perspective, this situation highlights a disconnect between the client's financial decisions and their tax situation. More importantly, it creates an opening for a broader conversation.
Asking the question, "Would you like to reduce or eliminate these kinds of tax surprises in the future?" can shift the discussion from simple tax compliance to financial planning. It creates an opportunity for the CPA to be a partner in improving tax outcomes rather than simply reporting them.
The overlooked opportunity in retirement accounts
IRAs and 401(k)s are often treated as "set it and forget it" investment vehicles. Contributions are made, investments grow, and the assumption is that taxes will be dealt with at some future date. But that future will certainly come, and it might come with significant tax liabilities.
The question is whether there is a strategy in place to manage this future tax event. In many cases, the answer is no. Instead, clients are left to their own devices, relying on structures provided by their employers, such as online portals, self-educational modules, and in some cases, robo-advisory services. These tools can be useful, but they are inherently limited. They operate on generalized assumptions and cannot fully account for the complexities of an individual's financial situation.
Moreover, access to information does not guarantee the client will be able to devise a good financial plan. Clients may have the tools available to them, but that does not mean they will use them correctly, or at all.
This gap is where CPAs can add significant value. By introducing proactive planning around retirement assets, firms can help clients make more informed decisions about contributions, withdrawals and long-term tax efficiency.
Importantly, this does not require accountants to become wealth managers themselves. Instead, it points to the value of collaboration.
Partnership as a practical path forward
For many CPAs, the idea of offering wealth management services raises legitimate concerns. Regulatory requirements and the operational demands of building a new line of business can all present obstacles. This makes a partnership model a practical alternative.
By partnering with a trusted wealth advisor, CPAs can extend their service offering without assuming the full burden of implementation. In this arrangement, the CPA remains the primary relationship manager, while the advisor provides investment and planning expertise. The result is a more comprehensive client experience and an opportunity for the CPA to take a piece of the revenue pie associated with wealth planning.
This approach also reinforces the CPA's role as a central figure in the client's financial life. Rather than referring clients out and relinquishing control, the CPA remains actively involved, ensuring that tax considerations are integrated into broader financial decisions.
Expanding the relationship across generations
Many accounting firms serve multiple generations within the same household. Parents, children and even grandchildren may all rely on the same CPA for tax preparation. But the nature of the relationships across generations varies.
Older clients, particularly those in retirement, may have relatively stable financial needs. Their planning is largely complete, and their focus is on mindful withdrawal and preservation. Their children, however, are often in a different phase, building careers, raising families and making decisions that will shape their long-term financial plans.
Most of the time, these younger clients are earning a good living but lack structured financial planning, and their engagement with their CPA may be limited to annual tax filings. And the relationship will remain there unless wealth planning services are introduced.
This broader relationship makes the CPA no longer simply a preparer of returns, but a resource for financial guidance that can optimize the client's tax outcomes. This not only enhances the value delivered to the client but also strengthens the firm's connection and relationship with the next generation.
The accounting profession is, by nature, conservative, and many practitioners are accustomed to well-defined, predictable billing structures. Introducing new fee models, particularly those tied to wealth advisory services, can feel unfamiliar. There are several compensation models that allow accounting firms to increase revenue associated with the expanded financial planning services without disrupting their core business.
Opportunity for CPAs
Within a typical accounting practice, anywhere from 60% to 90% of clients may fall into the category of low-fee, compliance-focused relationships. Of that group, a meaningful portion, perhaps around 30%, represents strong candidates for expanded services. These are clients with sufficient income, assets or complex financial needs to benefit from planning, but who have not yet engaged in it.
If even a fraction of these clients can be transitioned from $500 engagements to relationships generating $2,000 to $5,000 annually, the effect on the firm can be substantial. Revenue increases, and at the same time, the firm's expertise, i.e., advising clients on how their financial decisions can impact their tax outcomes, is more fully utilized.
Meanwhile, clients who do not fit this model can be evaluated more objectively. If they require minimal services and offer limited opportunity for growth, they may be better served elsewhere. This allows the firm to focus its resources on relationships that are both more valuable and more aligned with their capabilities.
In the end, the goal for offering wealth planning services is not to eliminate the $500 client, but to reimagine what that client can become.
