Three Tips for CPAs Looking to Break into Wealth Management

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A lot of CPAs have taken hits to their profit margins as their business becomes more commoditized and as accounting tasks are more easily tackled with a do-it-yourself strategy. Many are wondering whether there are greener pastures in comprehensive financial planning and wealth management, and questioning whether this is the time to add financial advice to their list of client services.

“Many CPA firms have tried to bring in their own wealth management team to hand off firm clients to and then share in the revenue,” observes Dave Moran, a partner with Experienced Advisors Recruiting, LLC in Fort Lauderdale, Fla.

“Sometimes it works, sometimes not so much,” he tells eFinancialCareers, as CPA firms historically have not paid much attention to the financial planning side of the house. “It’s about time that changed.”

One of the most encouraging perspectives on a CPA's prospects in the financial advice comes from Investment News, which reported: “In the post-financial-crisis environment, geeky is good in financial planning.” Adding that CPAs—due to their trustworthy and less-than-slick image—may have an advantage over other investment professionals trying to peddle financial advice.

On the other hand, at a time when the likes of H&R Block and Turbo Tax are encroaching on their territory, sole-practitioner CPAs should approach the planning field with caution, recruiters say—keeping in mind it is a very different business with few by-the-book solutions. As Caleb Brown of New Planner Recruiting in Tallahassee, Fla. told eFinancialCareers: “CPAs aren't going to be able to download a how-to guide to get all the answers they need for clients who are demanding full wealth management. There are very few absolutes in financial planning, and it is much more subjective compared to what [CPAs] are used to."

Here are three tips for accountants looking to get a leg up in financial planning:

1. Education. Brown recommends going for the Personal Financial Specialist (PFS) designation offered by the American Institute of CPAs, and/or the Certified Financial Planner (CFP) designation from the Financial Planning Association. Brown has done two webinars for the PFS program, a designation available only to CPAs. Investment News reports that the number of CPAs earning the PFS designation was up 12 percent last year from 2010. Even more impressive: Last year, 427 accountants also sat for the Certified Financial Planner (CFP) exam, compared with just 249 in 2010. The pass rate was 60 percent, says Investment News.

2. Be personable enough so the client shares their dreams, hopes and ambitions. “Financial planners usually use a more probing interview style with a heavy emphasis on open-ended questions designed to get the client to open up and share dreams, hopes and ambitions rather than just a balance sheet with quantifiable information,” says Moran. Again, financial advisors can’t just go by the book. They have to be personable as well as probing.

3. Create a solo practice or partner up. Accountants from the Big Four or large regional accounting firms who already have a steady flow of clients may be well-positioned to approach clients they’ve traditionally handled taxes for and suggest they add on financial advice, says Brown. When he was a planner, it was his clients’ check book register and the last two to three years’ tax returns that offered him the most perspective on his customers’ planning needs. “CPAs already have the tax situation memorized and thus have a leg up,” says the recruiter, though they still might want to join the wealth management division of a regional accounting operation rather than going solo.

And, if you are a sole-practitioner CPA handling mostly audits and tax returns, it may make sense to partner up with someone else—such as a CFP or a Registered Investment Advisor (RIA). Many CPA firms are mom and pops and sole practitioners used to operating “in a box,” says Brown. He adds that the CPA business is often the land of “one or two options” for customers, which can make for a frustrating transition to comprehensive financial planning and its many twists and turns.

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