Walking the line(revenue sharing)

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Feb 21, 2010 10:33 am



   I would like to hear how some experienced advisers who rent office space from accountants ensure business separation but share expenses and clearly avoid the crime of revenue sharing.  ???????????????????

Feb 21, 2010 10:46 am

This has got to be a joke, right?

Feb 21, 2010 11:46 am

Tell your accountant to get licensed - if he's a cpa, the 6 will be a cake-walk.

Then you both stay clean.

Feb 22, 2010 11:45 am
flyboy26:



   I would like to hear how some experienced advisers who rent office space from accountants ensure business separation but share expenses and clearly avoid the crime of revenue sharing.  ???????????????????

I trudged through this over the last few months, spoke with several consultants and am currently sitting in my office at the CPA firm having just been approved by the State Securities Board on friday.  The CPA's liked the idea of bringing an additional service to their clients (and earning additional $$), but had no interest in being investment advisors.  We formed a seperate LLC in which I am the sole IAR.  I pay a fixed rent for my office, copier, computer, etc.  Here's the tricky part, the partners of the CPA firm have bankrolled the operation, and in turn have a minority financial interest in the new firm (I retain sole control).  I cannot give them referral fees, but they can passively share in the net income of the busienss venture.  As long as it is disclosed well to the client that I am giving the investment adivce, and not the CPAs, this is to my understanding a kosher arrangement.  Then again, I'm no attorney, so any feedback as to why we might be commiting the "crime of revenue sharing" would be appreciated.
Feb 22, 2010 1:58 pm

A friend of mine has a similar deal with a CPA and insurance guy except it is shady...

 
He pays them in quarterly "rent" payments throughout the year...
Feb 22, 2010 2:52 pm
chief123:

A friend of mine has a similar deal with a CPA and insurance guy except it is shady...

 
He pays them in quarterly "rent" payments throughout the year...
The rent I pay is actually for tangible benefits (office, phone, computer, copier, etc).  Before the demise of Glass-Steagall, a percentage based rent was how the banks had in-bank advisors.  I dont really see how it is shady.  The CPAs are happy because they know in general what I am going to do for their clients, the clients are happy in that it is more convenient, and their CPA is brought into the process,  I am happy in that I have an affluent client base to work from that was built over the last 60+ years.  Not only that, but the floor above me houses the largest general practice attorney firm in the area, and all of the title companies have their office either in this building or the one next door.  Time will tell, but I think it will work better than a bank lobby setup.  Practically all of the people that come in and out of here are qualified, otherwise they wouldn't have the need of a CPA.
Feb 22, 2010 9:23 pm

It should be pretty straight forward, CPAs are good guys and have a lot to offer B/Ds. Their knowledge of the tax laws and financial advice in general is a terrific addition to any FP's office. Highly recommended!

Feb 22, 2010 9:28 pm
newrep:

It should be pretty straight forward, CPAs are good guys and have a lot to offer B/Ds. Their knowledge of the tax laws and financial advice in general is a terrific addition to any FP's office. Highly recommended!



Riiiiiiiiight.

CPAs make some of the dumbest financial decisions I've ever seen.

Feb 22, 2010 9:31 pm

What are the educational pre-requisites in order to take the Series 7 exam?


 
Answer: High school degree!!! LOL
 
Now -- what are the educational pre-requisites for the CPA exam?
Answer: BBA in Accounting with 30+ hours in Accounting coursework....oh, and good looks. HA!
Feb 22, 2010 9:35 pm

What are the educational pre-requisites for taking the CFP?

Answer:  Bachelor's degree and five years experience.

What are the educational pre-requisites for taking the CFA exams?

Answer:  High school diploma (btw - what is a high school degree?)

The CFA exam is the gold standard for financial exams.  Considerably more difficult than the CPA exam.

Having pre-requisites doesn't make someone smarter.  Get over yourself. 

Feb 22, 2010 9:51 pm

Funny thing is....the average man has never heard of the CFA....but EVERYONE knows that CPAs are the gold standard. Society knows the commitment that must be made to attain the CPA certification.

 
Ask anyone on the street....what is a CFP? Then ask, do you know what CPA stands for?  No comparison.
Feb 22, 2010 9:53 pm
newrep:

It should be pretty straight forward, CPAs are good guys and have a lot to offer B/Ds. Their knowledge of the tax laws and financial advice in general is a terrific addition to any FP's office. Highly recommended!

 
Yeah we get it you are a CPA...
Feb 22, 2010 9:57 pm
newrep:

Funny thing is....the average man has never heard of the CFA....but EVERYONE knows that CPAs are the gold standard. Society knows the commitment that must be made to attain the CPA certification.

 
Ask anyone on the street....what is a CFP? Then ask, do you know what CPA stands for?  No comparison.

Yeah it is so difficult you get replaced by Turbo Tax...
 
I love CPAs who try to run portfolios too.. Fkng messes..
 
PS Accounting courses aren't hard...People who couldn't grasp Economic trade down to Accounting degrees(which is a small notch up from Marketing)
Feb 22, 2010 10:01 pm
newrep:

Funny thing is....the average man has never heard of the CFA....but EVERYONE knows that CPAs are the gold standard. Society knows the commitment that must be made to attain the CPA certification.

 
Ask anyone on the street....what is a CFP? Then ask, do you know what CPA stands for?  No comparison.



From the CPA forums:

http://www.cpanet.com/cpa_forum/forum_posts.asp?TID=3189&PN=1

First time pass rate for CPAs in 2009 - 49%
First time pass rate for CFA exam in 2009 - 28%

Here's a guy who could pass the CPA exam but not the CFA.  http://cpacfa.blogspot.com/2009/01/cpa-vs-cfa-vs-mba.html

Feb 22, 2010 10:13 pm
newrep:

It should be pretty straight forward, CPAs are good guys and have a lot to offer B/Ds. Their knowledge of the tax laws and financial advice in general is a terrific addition to any FP's office. Highly recommended!

That was my thought, the marriage of tax and investment advice, combines for synergy.  I can't stay on top of FASB, but they can't stay on top of the evolution of Wall Street.....
Feb 22, 2010 10:15 pm
chief123:
newrep:

Funny thing is....the average man has never heard of the CFA....but EVERYONE knows that CPAs are the gold standard. Society knows the commitment that must be made to attain the CPA certification.

 
Ask anyone on the street....what is a CFP? Then ask, do you know what CPA stands for?  No comparison.

Yeah it is so difficult you get replaced by Turbo Tax...
 
I love CPAs who try to run portfolios too.. Fkng messes..
 
PS Accounting courses aren't hard...People who couldn't grasp Economic trade down to Accounting degrees(which is a small notch up from Marketing)

CPAs are getting replaced at a lower rate by Turbo Tax than IA's are getting replaced by Etrade, et al, IMHO.
Feb 22, 2010 10:35 pm
iceco1d:
newrep:

Funny thing is....the average man has never heard of the CFA....but EVERYONE knows that CPAs are the gold standard. Society knows the commitment that must be made to attain the CPA certification.

 
Ask anyone on the street....what is a CFP? Then ask, do you know what CPA stands for?  No comparison.



Not that you aren't already getting completely OWNED in this thread, but here's the OBVIOUS answer to the CPA vs CFA name recognition...

CPAs are a dime a dozen.  You do taxes for Joe Burger Joint.  CFAs run billions in institutional money.

So congrats, the average factory worker knows, and maybe uses, your services.  Only UHNW and institutional investors employ the services of CFAs. 

Once again, you're out of your league here. 

Joel - I don't know if I agree with that statement (just because, I truly don't know).  However, I think that Turbotax and E-Trade are equally harmful.  Competent advice is worth every penny...I don't have much sympathy for those who get in tax trouble because they wouldn't fork over $250 to a CPA, nor do I have any sympathy for those who trade themselves into huge losses or big tax problems for the sake of $9 trades.

No problem, I live in a different world than you.  I would be surprised if we have more than one CFA that lives within 500 geo miles of me.  Not to say its not a vibrant community.
Feb 23, 2010 4:49 pm

I think the worlds in which we live are very similar:
Turbotax=Etrade
H&R Block=Merrill Lynch
Liberty Tax= Edward Jones