For several reasons, accounting firms establish wealth management practices where they share in the revenue. Regularly topping the list is to serve their clients better. Close behind is the desire to generate meaningfully more revenues for the firm. This is especially true for smaller accountant firms as measured by the number of partners. While some accounting firm wealth management practices are doing exceptionally well, many are not.
In a survey of 328 senior partners at accounting firms with 10 or fewer partners with wealth management practices, 55.2% reported these practices are unsuccessful. Remember, this is a subjective measure. Nevertheless, it shows that many accounting firms’ wealth management practices are not achieving the expectations and goals of the accountants. Breaking down the numbers some more…31.1% of the senior partners reported that their wealth management practices were moderately successful, and only 13.7% said their wealth management was very successful.
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, “There’s tremendous, really tremendous, interest among all sizes of accounting firms in having a wealth management practice. The complication for many of these firms is that wealth management differs from their accounting and advisory practices. To be very effective requires having a strong wealth management platform that matches up to their clientele, having the appropriate processes in place, and having talented wealth managers who are technically proficient and can also work well with clients and accountants.”
While there are well-documented and time-tested best practices accountants and advisors can use to grow a wealth management practice significantly, many of them have not been extensively adopted. “Financial advisors, for example, after coming to an agreement to work with an accounting firm, many times feel that they’ve closed the deal and can now expect clients to come their way,” says Brett Van Bortel, director of consulting services with Invesco Global Consulting and co-author of Street-Smart Networking: How Financial and Legal Professionals Can Cultivate Centers of Influence for a Flood of New Affluent Clients. “The reality is that such agreements are just setting the stage for the two professionals to roll up their sleeves and find ways to deliver wealth management expertise to the accounting firm’s clients.”
The senior partners who said their wealth management practices are very successful also say they are taking a systematic approach to identifying clients of the accounting firm who can benefit from wealth management and strategically introducing the wealth management practice to them. According to Andree Mohr, chief implementation officer for Integrated Partners, a leading financial advisory firm where she oversees the organic growth initiatives, including the CPA Alliance program, “After we have connected high-quality wealth managers with great accounting firms, we take an active role facilitating opportunities to deliver financial solutions to clients. Just connecting the professionals is rarely enough.”
Consider the following three facts: (1) only about a sixth of the senior accounting firm partners say their wealth management practices are very successful, (2) there are proven methodologies that can substantially increase their success, and (3) there is great demand by accounting firm clients for wealth management solutions. The conclusion is that there are phenomenal opportunities for accounting firms and wealth managers to both better serve accounting firm clients and extensively profit.
Russ Alan Prince is a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.
