A Wealth of Opportunity: CPAs Can Expand Their Practice by Helping Clients Assemble and Monitor Financial Management Teams
EXECUTIVE SUMMARY * CPAs who don't want to provide investment advice can create a profitable practice area helping clients assemble wealth management teams consisting of investment advisers, insurance brokers, attorneys and other professionals. * CPAs operating on a fee-for-service basis can offer to assist clients with performing due diligence on potential wealth team members and vetting specific investment and other proposals made to the client. * CPAs can charge individually or in combination for a number of services, including sitting in on client meetings with advisers, assessing the tax impact of various strategies and providing the objectivity and analytical thinking to counteract product sales pitches that appeal to clients' emotions. * It is crucial for CPAs considering the addition of support services for wealth management teams to understand the regulatory and standards structure that governs the various specialties within personal financial planning. CPAs don't want to accidently give advice that subjects them to regulatory scrutiny or puts them under AICPA standards for a certain specialty. * Continuing education is essential for CPAs looking to assist with wealth management teams. CPAs need to know enough about investment theory, risk management and human behavior to properly analyze specific advice and know how to counsel clients effectively. * CPAs must make sure that clients make all the final decisions on financial planning moves and that clients accept responsibility for those decisions. Engagement letters play a key role in protecting the CPA. * Before advising clients about wealth management teams, CPAs should consult with their attorneys and insurance agents. ********** [ILLUSTRATION OMITTED] Much has been written in recent years about wealth management services that call for practitioners, including CPAs, to have personal financial planning certification and to come under investment-adviser or other regulations. Much less attention has been paid to PFP services that don't require specialization or additional licensing. One of these services is helping clients assemble and oversee wealth management teams. In addition to CPAs, these teams consist of attorneys, investment advisers, pension actuaries, insurance experts and others. CPAs also can offer important accounting and tax services to wealth management teams. For tax practitioners, the ability to provide these PFP-related services is one of many market differentiators between CPAs and registered tax return preparers (a designation recently created under IRS regulations). For other CPAs who don't have a credential such as the AICPA's Personal Financial Specialist (PFS), PFP-related services present an opportunity to add a profitable practice area, though additional education might be necessary. THE VALUE PROPOSITION While some clients know how to choose and monitor a wealth management team fitting their needs, most do not have the expertise or time to adequately vet the array of professionals needed. CPAs are well positioned to help clients pick the right advisers and, perhaps more important, to avoid the wrong ones. That's because CPAs possess a number of attributes essential to this role: * Strong, often multigenerational trusted client relationships. * Related intimate knowledge of the client's financial and, often, nonfinancial issues. * Fiduciary responsibility to act in the client's best interest (except in certain cases, such as independent audits). * Professional discernment to disqualify those likely to be a poor fit for a client's team. * The related ability to recognize inappropriate planning approaches for a particular client. * A strong understanding of the unique financial planning issues of business owners. * Deep, relevant technical skills in such PFP areas as tax and estate planning, budgeting, financial analysis and managing cash flow. …