Branching out: CPAs venture into financial planning, wealth management

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It took a depressed economy to convince some accountants to spread their financial planning wings.

In recent years more certified public accountants have expanded their array of services to include financial planning and even wealth management — in most cases because clients were asking for it.

“Because of the uncertain and complex time, clients are naturally looking to their trusted adviser CPA,” said Andrea Millar, American Institute of Certified Public Accountants senior technical manager of the Personal Financial Planning division in New York.

Call it the evolution of the accountants — they are doing more than 1040s. Many CPAs, who spend their days doing taxes, accounting and auditing services, are adding financial planning to their array of services; firms are opening financial planning or wealth management divisions; and CPA firms are partnering with financial planners and wealth managers.

Either way, it’s a brave new world and not without critics, as CPAs are known to be conservative types who stay within their lane of expertise. But when the economy tanked in 2008, it seemed only likely that people would turn to their accountants — usually the person who truly knows their financial story — for some advice on how to plan estates, retirement and investments.

“CPAs have been getting more involved in financial services,” said Scott Bush, chairman of the Colorado Society of CPAs and managing partner of Fort Collins-based Soukup, Bush and Associates.

“CPAs are trusted business advisers — they have the skills for financial planning and advising on financial investment,” Bush said. “And firms have become full service — they don’t just do taxes.”

It’s not just the economy and the need to generate more revenue, said Rollyn Wild, president and CEO of Advisers Investment Management, a registered investment adviser. CPAs have a desire to become more valuable to their clients, he said. His investment firm partners with 11 CPA firms in the region so that CPAs can offer wealth management services to their clients. He teaches CPAs how to talk about investments with their clients — and his firm handles all the actual investments.

“We have found, through personal experience, that working with the CPA and end client, they are happy to get the services from their CPA,” Wild said. “People are looking for someone they can trust.”

The AICPA has given CPAs the nod to pursue financial planning — and even encouraged it since 1987 when the organization created a Personal Financial Specialist (PFS) credential. But it’s only been the past four years that CPAs have embraced the expanded role. Of the 386,000 AICPA members, about 5,000 have PFS credentials — about 115 in Colorado — and 25 percent of that growth has been since 2008.

“I expect to see continued growth in the PFS designation,” Millar said.

But not all CPAs are on board with the trend. Mark Patterson, CPA and owner of MAP CPA, said CPAs have been going into other markets because of opportunity. But he has stayed in the CPA lane with tax expertise, he said.

“There are people who are doing both,” he said. “But how good they are doing both can be questioned. There is a lot to know about investments and keeping on top of all that information, let alone on top of all the tax law.”

It makes for one heck of a conversation at the annual AICPA conference.

“It’s a big issue,” said Allan Roth, owner of Wealth Logic, who is a certified financial planner and a CPA. “It can be good or bad, depending on what the CPA does for the client.”

Wealth management is a much different, trickier area for CPAs to venture. The Colorado Society of CPAs does not have a stance on CPAs as wealth managers, Bush said.

“It really depends on the individual firm,” he said. “I would like to stay independent on the tax side and let someone else advise on investments, but there are a lot of CPAs that are doing both.”

The advantage for the client would be one stop for all financial services. And the advantage for the CPA is increased revenue, typically managing a client’s portfolio for a percentage of assets. It is a natural step to growing a CPA business.

“I think the (CPAs) who really know what this is about understand that there are a lot of ways to do business,” Millar said. “They can stay objective … the beauty of financial planning is there are so many different ways to put a practice together.”

The best model might be CPA and investment firm partnerships, said Luke Gheen, owner of Gheen and Co., which has offices in Colorado Springs and Denver. Gheen, a CPA and registered investment adviser, struck up a partnership this summer with Advisers Investment Management so that he can provide wealth management services to his clients.

“The intent of all this is to create a firm that is a one-stop shop — but to make sure clients get the best people,” he said.

Through his firm’s partnership with Advisors Investment Management, he can talk with clients about investing, then AIM makes the actual investments and compliance.

“It’s a great situation,” Gheen said. “I don’t have to recreate the wheel.”

The partnership model shakes up the old way of doing business, Wild said. But it may be catching on. Advisors Investment Management has signed on with four CPA firms in the past year, Wild said.

“I’ve been trying to work with CPAs since 1988,” Wild said. “It’s in the last few years we have been starting to see more activity as older CPAs turn practices over to younger CPAs — people don’t like change.”

CPAs may be coming around to the idea of either themselves providing financial planning and wealth management services, or at least partnering with firms that do. In an AICPA survey of CPAs, nearly 60 percent say they believe they will need to provide a greater variety of services in the coming years, according to the CPA Horizons 2025 report, which aimed to identify trends in the CPA industry.

“CPAs are the go-to person for the client,” Wild said. “We are in the background providing the CPA with services they can bring to their client. Most end-user clients have a relationship with their CPA — that is who they trust.”

Colorado CPAs

14,242 active Certified Public Accountants

1,359 CPA firms

115 CPAs with Personal Financial Specialist credential