A growing percentage of accounting firms have wealth management practices. Most of these practices provide investment management and life insurance, or both. Based on the research, most accounting firms’ wealth management practices are not close to reaching their potential.
Accounting firms provide wealth management to serve clients better. This is—or must be—the primary motivation for an accounting firm providing wealth management expertise. Wealth management also generates substantial additional revenues. Wealth management practices can be an excellent way for accounting firms to cultivate new clients for wealth management practices and other accounting firm practices.
The logic of accounting firms providing wealth management services and products is sound. However, poor implementation is why so many accounting firms’ wealth management practices underperform.
Accounting firms deliver wealth management in two primary ways. Accounting firms can establish their wealth management practice, which can be accomplished organically or by acquisition. Or, accounting firms can joint venture with a wealth management firm. Both approaches are viable, and the better one for any accounting firm is a function of many factors, including cost, relative time commitments and clientele.
Andree Mohr, chief implementation officer for Integrated Partners, a leading financial advisory firm where she oversees the growth initiatives, including the CPA Alliance program, “It is widely accepted that within all sizes of accounting firms, many clients could benefit from wealth management. When accounting firms’ wealth management practices underperform, they are not capitalizing on these extensive relationships. And they are doing a disservice to their clients. There are various reasons for this failure, one of the most pronounced being a lack of attention to process.”
Most of the time, at accounting firms, the focus is on financial services and products. For example, a great deal of attention is directed to the wealth management platform. Additionally, there is much effort at many accounting firms to provide a solid educational foundation for financial services and products. These considerations are critical. So many accoutering firm wealth management practices underperform due to the erroneous perception that the business will boom with an exceptional wealth management platform combined with an exceptional education on the various wealth management services and products. When these two criteria are met, the business regularly fails to boom. It regularly comes nowhere close to initial expectations. It commonly badly underperforms.
According to Paul Saganey, founder and president of Integrated Partners and co-author of Optimizing the Financial Lives of Clients: Harness the Power of an Accounting Firm’s Elite Wealth Management Practice, “Being able to deliver the range of financial services and products skillfully is essential. Just as important is aligning the range of financial services and products to client needs, wants, and concerns. Working extensively with accounting firms is where many of them tend to fall short. We help them correct this limitation resulting in meeting a steady stream of their very best clients for whom wealth management can prove very beneficial. When our advisors are working with an accounting firm’s clients, the accounting firm profit from sharing in wealth management revenue and get additional revenues for their other practices.”
Combining technical wealth management expertise with discovery, accounting firm wealth management practices significantly increase the probability of achieving their potential. Clients are better served, more highly preferred clients come into the accounting firm from referrals, and the accounting firm financially does substantially better.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.
