When I sat down to write this column, the deadline for paying taxes was looming and a meeting with Felix Aisen, my CPA, was fast approaching. This time of year always reminds me how much faith I put in Felix and highlights how much potential CPAs have for moving into the financial planning arena.
Are accountants a legitimate threat to brokers? There's no easy answer. It depends on whether reps are actively seeking alliances with CPAs or sticking their heads in the sand.
As a financial adviser, do you notice any loss of business after April 15? Do you know whom your clients use for tax advice and preparation? Can you see a benefit to working with accountants or do you simply want to ignore reality? Ignorance can be bliss, but only to a point. When it starts to affect your business, it's already too late.
As a group publisher, I am also responsible for Trusts & Estates magazine, which is the journal of wealth management for estate planning professionals. Many of its readers are CPAs and have strong, mutually beneficial relationships with brokers. At the same time, more Trusts & Estates readers tell me their firms are migrating toward financial planning.
Successful CPA firms are no longer content with performing tax compliance work. They already have the skill to analyze complex financial situations and their clients' trust as advisers. The questions accountants get from clients are predominately related to tax concerns, but clearly cross over into planning disciplines — estate planning and retirement planning in particular.
Given that CPAs have the details of your clients' tax and financial histories, accountants could easily lay claim to a better understanding of clients' future investment needs. But savvy brokers request and get the same information from their clients so accountants don't maintain the advantage.
As a retail investor, I don't have to put any more money in the market or sell my broker-recommended stocks. Dealing regularly with my investments is strictly voluntary. However, I have to — like it or not — meet with my CPA and complete a tax return annually. So he and his firm get one shot a year at capturing my business.
Plan ahead and work with your clients' accountants now before it's too late. If you have had some successes or failures in building alliances with CPAs, share your knowledge. Contact Editor in Chief Dan Jamieson or me so we can develop articles on this important topic.