A Case for CPAs in Wealth Management

Jun 16th 2011
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By Al Prentice, vice president, strategic firm development, 1st Global

There are many reasons that CPAs provide wealth management solutions for their clients: clients want their CPAs to be involved, stronger client relationships, higher profitability, and construction of an enterprise-building business model. But there is another very compelling reason that has resulted from the financial crisis of 2008-2009: A vacuum has developed in the financial services marketplace that CPAs are very well-positioned to fill.

There are four very important ramifications of the financial crisis regarding CPA clients. First, according to Investment News and The Wall Street Journal, more than 110,000 licensed financial advisors have disappeared from the industry. Second, several financial services firms that offered financial advice have disappeared from the landscape such as Lehman Brothers and Washington Mutual. Third, many of the remaining firms have been absorbed or morphed into new versions. Witness the merger of Merrill Lynch and Bank of America and the resulting culture clash. Finally, the surviving firms have now focused on profitability, often at the expense of your clients. For instance, Merrill Lynch now has annual production (gross sales) minimums of $500,000. Even Edward Jones has $240,000 production minimums for 2011, rising to $260,000 in 2012. Keep in mind that these are not assets under management goals; these are actually commission and fee annual minimums! Production numbers that come in under the minimum negatively affect the advisor’s compensation and can lead to termination.

The net result of these reactions to the crisis is that most retail advisors are moving upstream to what Cerulli and Associates labels the “ultra affluent” in order to remain profitable. The affluent and emerging affluent are being abandoned by many traditional advisors. And, of course, these emerging affluent and affluent clients are the typical “A” clients of most CPA firms. Therefore, many CPAs are now recognizing a tremendous opportunity to fill a gap in the marketplace with their own clients while simultaneously strengthening those existing relationships. At the same time they are building a new vertical business model that is often three to five times more profitable than traditional accounting services and building an enterprise business model that can be four to six times more valuable than their current business.

Is it any wonder that an estimated 40 percent of all public accounting firms are now offering some form of financial or wealth management services to their clients?

For more information about offering wealth management services as a CPA firm and how strategic business partnerships with accomplished financial advisors can impact your growth plans, contact 1st Global at (800) 959-8461 or [email protected].

This article and its content has been provided by 1st Global. With more than 500 firms affiliated with 1st Global, it is one of the largest wealth management services partners for the tax, accounting and legal professions. 1st Global delivers the required capabilities essential for wealth management excellence including progressive ongoing education, which places the firm in a unique position to offer wealth management knowledge.
1st Global was founded by CPAs on the belief that accounting, tax and estate planning firms are uniquely qualified to provide comprehensive wealth management services to their clients. Each affiliated firm is provided with education, technology, business-building framework and client solutions that make these firms leaders in their professions through dedicated professional client relationships built around wealth management.
1st Global Capital Corp. is a member of FINRA and SIPC and is headquartered at 8150 N. Central Expressway, Suite 500 in Dallas, Texas,(214) 265-1201. Additional information about 1st Global is available via the Internet at

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