2 The Opportunity for CPAs You’re committed to determining the needs and then delivering the right...
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2 The Opportunity for CPAs You’re committed to determining the needs and then delivering the right services to your clients. You play an important role
2 The Opportunity for CPAs Youre committed to determining the
needs and then delivering the right services to your clients. You
play an important role in the lives of your clients and in the
success of their businesses. However, there is a very real
opportunity in todays marketplace to do more. Industry research
tells us that affluent individuals, including business owners, are
very interested in obtaining more than tax services from their
accountants.
Slide 3
3 Business Models of Financial Advisors Investment generalist:
Advisors who offer a broad range of investment products and do not
specialize in a single type of product. Conduct brief fact finding
sessions and then offer clients a suite of possible products based
on their needs. Transaction focused Wealth managers: Advisors take
a comprehensive approach to meeting client needs by using a highly
consultative approach to construct integrated, personalized
solutions.
Slide 4
4 Business Models of Financial Advisors N = 2,094 financial
advisors Source: CEG Worldwide, LLC., 2007
Slide 5
5 The Two Business Models Compared N = 2,094 financial
advisors. Source: CEG Worldwide, 2007
Slide 6
6 CPA Opportunity Key Points Substantial numbers of clients
would like to obtain additional financial services from their
accountants. Despite this, relatively few accountants offer
financial services, meaning that relatively few clients obtain
these services from their accountants. When clients are able to
obtain financial services from their accountants, they report very
high levels of satisfaction with both products and service. The
interests of clients point to a wide range of financial services
needs, including investment management, insurance products,
financial planning and estate planning. Only a small percentage of
financial advisors are offering wealth management.
Slide 7
7 How to Implement a Wealth Management Business 1.Buy It
2.Build It 3.Joint Venture 4.Strategic Outsource
Slide 8
8 Buy It Advantages Proven talent can be acquired immediately
Allows leveraging of existing clientele of both organizations
Control over existing client relationship is retained Scale can be
obtained quickly Disadvantages Capital requirements make this
option suitable only for large firms. Firm assumes all risk
associated with the acquisition and new service offerings. Lending
in this economy
Slide 9
9 Build It Advantages Allows leveraging of existing clientele.
Control over client relationship is retained. Disadvantages
Requires substantial commitment to new resources, including
additional expertise and expanded infrastructure. May distract from
core competencies. Firm assumes all risk inherent in new service
offering. Custodian minimum
Slide 10
10 Joint Venture Advantages Requires minimal commitment of
resources. Allows leveraging of existing clientele. Control over
client relationship and level of client service can be retained.
Risk inherent in new service offering is shared with strategic
partner. Disadvantages Requires a close match between the firm and
the partner in terms of culture and requires significant time
commitment to ensure success. Equity left on table
Slide 11
11 Strategic Outsource Advantages Requires minimal commitment
of resources. Allows leveraging of existing clientele. Control over
client relationship and level of client service can be retained.
Adopt best practices through experienced provider Maintain all
ownership Quick startup time Disadvantages Some control lost
Possibly cost
Slide 12
12 Gross Revenue per CPA Firm from Financial Services N = 394
CPA Firms 3 or fewer partners= small Source: CEG Worldwide,
Capturing the Opportunity, 2004
Slide 13
13 RIA or Registered Representative Options on how form
business: Create and oversee own RIA practice Affiliate with an
entity as a registered representative Become a broker of a broker
dealer This comes down to fee based or commission All have pros and
cons, but primary issues would be equity, control, compliance and
perception
Slide 14
14 FINRA vs. SEC
Slide 15
15 RIA Formation SEC vs. State Registration $25,000,000 assets
under management requirement for SEC Net Capitalization
requirements - $12,500 Timing Costs Minimal IARD Filing U4 IARD
Example
Slide 16
16 Licensing Exceptions to 65 CFP - Certified Financial Planner
Awarded by the Certified Financial Planner Board of Standards, Inc.
ChFC - Chartered Financial Consultant Awarded by the American
College, Bryn Mawr, Pennsylvania PFS - Personal Financial
Specialist Awarded by the American Institute of Certified Public
Accountants CFA - Chartered Financial Analyst Awarded by the
Association for Investment Management Research CIC - Chartered
Investment Counselor Awarded by the Investment Counsel Association
of America, Inc.
Slide 17
17 Courses for License www.firesolutions.com
http://www.kfeducation.com/securities/ http://pfp.aicpa.org/
http://www.cfp.net/
Slide 18
18 Compliance Integral part of practice which cannot be
overlooked Must have individual overseeing the compliance Chief
Compliance Officer Outsource opportunities Email/File
Storage/Manuals/Procedures ADV Part I and II Investment Advisory
Agreements Privacy Policy Business Continuity Code of Ethics
Organizational Chart Policies and Procedures Gift Log
21 Your Practice Portfolio Reporting Custodian Rebalancing
Solution Financial Planning Software CRM Independent Entity
Position Analysis Solution Technologies Must Work Together
Slide 22
22 Solutions Portfolio Reporting Portfolio Center Black Diamond
Advent BridgePortfolio Custodian New Requirements Fidelity Charles
Schwab TD Ameritrade Scott Trade Rebalancing Tamarac I-Rebalance
TRX Financial Planning Naviplan Money Guide Money Tree CRM Client
Relationship Management Outlook Sales Force ProTracker Retdtail
Junxure Position Analysis Morninstar Advisor Workstation
Principia
Slide 23
23 Strategic Action Plan for Implementing a Wealth Management
Business Define the Vision Identify Needed Resources and Support
Create a Marketing Plan Bring it All Together: The Business
Plan
Slide 24
24 Reasons Why CPAs Fail at Implementing a Wealth Management
Business Too Busy with Core Tax Practice Not Willing to Risk Losing
Clients in Order to Transfer Their Practice Are Not Able to Change
Their Mindset to That of A Financial Planner Do Not Achieve Full
Partner Buy-In Champion???
Slide 25
25 Business Plan Interview partners asking: What have we done
in the past? What will stop you from referring? When a client asks
for a referral, how are you handling? Worked out? Your approach to
managing money? In looking at your client base, what is the
approximate net worth of your top 15 clients?
Slide 26
26 Quantify The Opportunity Extract the following from
Lacerte/Pro Systems into Excel: Interest Dividends Capital gains
distributions With this information, assign a relevant interest
rate to extrapolate the potential assets under management
opportunity. Compare to partner responses for largest 10 clients.
Taking the potential assets figure, multiply by an advisor fee rate
1% is a good approximation.
Slide 27
27 Present findings With your partners why/why nots and revenue
potential, have an offsite meeting to discuss if this truly
warrants an opportunity for the practice. Are the dollars enough?
Can the practice be of the same quality? Cost to start? Can the why
nots truly be overcome?
Slide 28
28 Should You Even Be in the Business?
Slide 29
29 Champion Each firm needs a champion to head up the new
offering. Will need to obtain their Series 65 or CFP. Any partner
sharing in fee revenue will need to have a Series 65 or equivalent.
Critical area to discuss with compliance for structuring.
Slide 30
30 Company Kick Off Host an event at a local establishment and
invite all potential clients XYZ University. Purpose is to announce
new service, but must be educational. Do not make a commercial.
Invite local attorney to present on estate planning issues. Be very
clear on topics and client level of sophistication. Invite
independent insurance agent to discuss relevant insurance topics
Tax partner to discuss tax planning Champion of wealth management
offering to discuss new approach
Slide 31
31 Wealth Management Offering Be very clear in your approach
and the value of having a CPA maintaining your portfolio Knowledge
of taxes Coordination with other tax professionals Independent and
unbiased Conservative Most trusted advisor Offer clients a second
opinion analysis of their portfolio. Explain your process of
working with clients.
Slide 32
32 Essential Strategies of Elite Financial Advisers Focus on
Affluent Private Clients Use the Advanced Planning Consulting
Process to Differentiate Yourself From the Competition Manage Your
Practice Like a Business Partner with Financial Institutions Make a
Lifelong Commitment to Learning
Slide 33
33 Focus on Affluent Private Clients What Type of Clients Do
You Have Today? Are They Suitable For Your Services? How Would You
Qualify Affluent Clients? How Would You Approach Them and Position
Yourself as an Expert? How Would You Communicate With Them? How
Would You delight Them in Order For Them to Become Your Marketing
Apostles?
Slide 34
34 Use the Advanced Planning Consulting Process to
Differentiate Yourself From the Competition How Do Affluent Clients
Buy Financial Services? What Can You Do to Eliminate Client
Turnover? What Should Your Investment Policy Statement Look Like?
How Can You best Demonstrate to Your Clients the Value You Bring to
Them?
Slide 35
35 Manage Your Practice Like a Business Which Financial
Services are Affluent Clients Looking For? How do You Spend All
Your Time on Revenue- Generating Activities? Where Can You Grow
Income, Even With the Downward Pressure on Fees? What Do You Need
to do to Sell Your Practice For Significant Value? How Do You Find
the Right Balance In Your Personal and Professional Life?
Slide 36
36 Partner With Financial Institutions Where Can You Get
Extensive Practice Management Support From Financial Institutions?
How Can You Leverage the Technical Support Available to Advisors?
Where Can You Get Advanced Sales and Marketing Training?
Slide 37
37 Consultative Client Process Discover Meeting Complete
Discovery Process Investment Plan Meeting Presentation of
Investment Plan Mutual Commitment Meeting Confirmation of
Commitment 45 Day Follow Up Meeting Organization of Account
Paperwork Regular Process Meetings Review of Progress and Wealth
Management Investment Plan and IPS Diagnostic of current situation,
our recommendations for moving forward and details on our
investment approach Wealth Management Plan Evaluation of financial
needs with recommendations
Slide 38
38 Discovery Meeting Record meeting Thorough and detailed
questions Always allow both individuals to answer Do not focus on
the assets focus on: Goals Values Relationships Process
Slide 39
39 Create Investment Policy Statement Create your own or use an
off the shelf solution: IPS Advisor Pro Mind Map Mind Mapper Goals
analysis Looking at where client is and where they want to be you
are there to help them fill in the gaps Monte Carlo Analysis
Slide 40
40 Financial Planning Two approaches depending on solution:
Goal Based Cash Flow Based Need to address clients major concern:
Do I have enough? Should have what if functionalities Asset
allocation models built in
Slide 41
41 For a consultative conversation on the concepts in this
presentation or questions about TPBS Capita Management, please
contact: Michael Tate [email protected] 916.929.1006
x103
