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Aging Clients Are a Potential Boon for Accountants

Jun 17th 2015
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A potentially vast treasure is looming for accountants willing to provide seniors broader financial planning services beyond traditional offerings, and the numbers support that claim.

Fueled by an escalating demand from the nation's aging population seeking advice on how to better save money, build cash flow, and conquer other money matters, the trend comes as the number of folks 65 and older is expected to explode. According to recent U.S. Census Bureau reports, Americans aged 65 and over will reach 88 million by 2050, up sharply from 47.8 million in 2015 and more than double from 39.6 million in 2009.

Figures also show that more CPAs are offering or considering providing financial planning services. Roughly 80,000, or 20 percent, of AICPA members practice in this space, says Andrea Millar, the group's associate director of personal financial planning. She added there has been growth in demand for the services via increased membership in AICPA’s Personal Finance Planning Section and higher attendance at its annual Advanced Personal Financial Planning Conference over the last five years.

Millar says the skills and education needed to serve this market align well with what is offered in the AICPA’s Personal Financial Planning Division. The division focuses on providing resources to help firms and their staff provide retirement, estate, tax, investment, and risk management planning to individuals, families, and business owners.

Demographics and the increased complexity of new retirement and financial planning needs were the key factors that prompted CPA firm Moss Adams in late 2014 to launch Private Client Services, a group that helps clients address these needs in a comprehensive manner.

Ryan Franklin, a senior financial advisor at Moss Adams Wealth Advisors, a subsidiary of Moss Adams, says Social Security planning, IRA strategies, insurance planning, and investment management are among the services offered. The group’s services help clients – particularly those over 65 – overcome these difficult issues.

While the business helps the firm collect new fee income, Franklin says it ultimately could mean savings for clients who otherwise might have to pay multiple providers to get the services. "Private Client Services allows us to differentiate ourselves from other accounting firms and gives us a competitive advantage when we are trying to bring in new clients", he adds.

After managing his accounting firm for many years, Thomas Morrone, CFP, CPA, transitioned his business over the last 15 years into a comprehensive financial advisory firm. He is now the principal of the U.S. Wealth Management office in North Haven, Connecticut.

The transition has been successful and Morrone estimates revenue has increased about 400 percent, though the firm works with far fewer clients. Instead of tax preparation only, the firm offers financial planning services that include estate and investment planning, though Morrone himself will still do a few client tax returns.

Offering financial planning services at their practices is an important issue accounting firms should consider because people are worried about outliving their money, says Kirk Blackman, a financial advisor and owner of Blackman Financial Services in Mitchellville, Maryland.

He added a growing number of individuals are looking to CPAs for financial advice beyond basic accounting and tax services. For instance, many seniors have questions about the required minimum distributions, required taxable withdrawals, from 401(k), 403(b), and IRA accounts. Individuals are also looking for alternatives to low-yielding taxable bank offerings. "It really is a big deal at this time", says Blackman.

In addition, observers say some CPA firms may not be providing financial planning because of potential liability risks. As such, their leaders have not made the business a top priority. Some accountants may also back away due to regulatory issues tied to offering investment advice or they don't favor the sales slant some financial service providers make.

Former accountant John Napolitano, chairman and CEO at U.S. Wealth Management in Braintree, Massachusetts, says whatever benefit accounting firms hope to realize from this growth population trend has to stem from their core business, who they are today, and what they are doing for clients.

He suggested that if they are like many CPA firms that don't do financial planning, retirement planning, or advise clients on important matters such as cash flow analysis, income forecasting, estate planning, or how to maximize their Social Security benefit, existing clients will not likely consider them as an option to handle their future financial needs.

Accountants can consider charging a fee for long-term tax analysis and rebrand themselves from just tax preparers to tax planners, says Jan Williams, a financial consultant and retirement planning specialist at AXA Advisors in Atlanta. He added CPAs who understand the role of qualified plans, annuities, life insurance, and tax-efficient investment portfolios are able to provide their clients a level of long-term tax planning that financial advisors do not provide.

The AICPA’s Millar says the first step to ensuring a firm is well-positioned to serve these individuals is to have a champion in the firm dedicated to the success of getting this practice off the ground.

Further key points on financial planning can be found here.

About the author:
Jeffrey McKinney is a long-time freelance business writer and reporter. He has written for Black Enterprise magazine for several years, covering a broad range of business and financial topics. He also writes regularly for Franchise Times, a highly regarded national publication covering the franchising industry.  

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