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The Odd Couple  Walter Matheu Jack Lemon

When CPAs and Wealth Managers Come Together

While the advisor and accountant might seem like an odd couple, there are synergies to be had

At first blush, accountants and financial advisors appear to make strange bedfellows. The former are often perceived to be more analytical and the latter, more entrepreneurial. These perceptions aside, many medium to large accounting firms have taken steps to establish or greatly expand their financial services practices primarily to: 

  • Deliver more robust service offerings to their clients;
  • Become more profitable as a firm;
  • Diversify their traditional accounting practice; and
  • Counter the competition that is providing financial services to their clients.

“Accounting has been increasingly more competitive, and accounting firms need to be able to add value for their clients beyond traditional compliance work, says Marc L. Scudillo, CPA and managing director of EisnerAmper’s wealth management unit. “Increasingly more clients felt that tax preparation was a commodity,” so his firm had to make a change. While EisnerAmper established their wealth management practice in 2001, they believe it is still in its infancy and that there is tremendous upside growth potential.

Accounting firms also see a sizable benefit in being able to work with their clients in a way that is unique to their profession. Clients already view their accountants as their “trusted advisor,” and they are generally more open to divulging their complete financial picture with little or no hesitation. 

Another advantage that accounting firms believe they have over the traditional brokerage and advisory firms is that their clients don’t feel that they are being sold something. They view the investment advice they are receiving as part and parcel of their tax, estate and business planning.  

But marketing has been a big challenge, Scudillo says. “We have to work at having clients know that these services are available to them in a fashion that is unique to their previous experiences from the brokerage industry.” Scudillo believes it’s a challenge partly because of the “protection” component an accountant feels toward the client and also the fear that the firm would be perceived as a “sales” organization.

In April 2013, we received a call from "Phillip" the head of the wealth management unit of one of the largest family-owned, property and casualty insurance companies in the country.  

A Growth Opportunity

Affiliating with an established CPA firm can be a growth opportunity for one’s practice. Phillip, for example, had moved from Merrill Lynch in 2004 to launch a wealth management division at one of the largest family-owned, property and casualty insurance companies in the country. At that time, it became clear that the insurance firm was not investing adequately in his unit and that, as a result, the wealth management practice was not growing nearly as quickly as it should have been. He felt the firm no longer saw the value in the wealth management group because the unit made up only 2 percent of the firm’s gross revenue and was not their core business.

We introduced Phillip to a large CPA, business consulting and financial advising firm, with a good number of corporate clients, a retirement planning sub-specialty and a core practice that catered to the mass affluent. Phillip saw many synergies with a potential merger. The CPA firm had recently completed a similar deal with the wealth management unit of another property and casualty company. Moving to the new firm, he would be able to more easily recruit advisors in the CPA firm's network and cross-sell CPA services to all clients.

The merger gave the CPA firm a chance to expand their footprint, provide their clients with more services including risk management, gain better access to professionals through more locations, and grow their assets under management. In the fall of 2013, Phillip and his advisors moved nearly $250 million in assets to the CPA firm.

So far, Phillip and his team have been introduced to many of the new firm’s corporate clients, started writing retirement plans and have been providing wealth management services to a whole cadre of wealthier clients that they never had exposure to at their prior firm. He believes the firm values their business and will continue to invest in it providing the scale, depth of services, and referral stream that he had initially sought. The accounting firm has gained another revenue stream and prospects for its accounting and tax services.

While the financial advisor and accountant might seem like a bit of an “Odd Couple” at the outset, as long as the CPA firm understands that the wealth management unit cannot be run like an accounting firm and vice-a-versa, there are significant synergies to be had.   

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