The Importance of CPAs Working With Insurance Advisors

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Do you remember when we were kids, and we took out that old chess set or Monopoly game only to find pieces missing? What did we do? We played anyway, improvising with cardboard-made replacements or without any replacements at all. Eventually, what we were missing would catch up to us, but we crossed that bridge when we came to it. This is analogous to CPAs integrating their business platform into financial services. It is the right move, but without the correct strategic pieces in place it very often ends up as an exercise in futility. The primary important relationship the CPA should have in place is with the advanced planning insurance advisor.

When you look at the Web sites of accounting firms, one can see that the walls separating financial specialties have come down. They advertise that they handle retirement planning, pension planning, estate planning, risk management services and even investment advice. But when you delve into what this means, it usually means a conversation leading to a recommendation and a referral to an outside advisor for a product solution. Even if the solution lies within the firm, usually in the hands of Certified Financial Planners, the problem is the same; that within this system there is no one who is expert at linking the product solution with consultative strategy in a seamless fashion. What this pattern does is create a disjointed advisory system that contributes to the outsourcing of firm revenue. A CPA partner who has an outside advisor alliance either gets paid directly from the advisor or they don’t. Either way, the firm does not get paid!

The apparent differences in professional performance and interview styles between the CPA and the insurance advisor are huge, but with a second glance, our professions are more closely aligned than is perceived. The misconception unfolds like this; CPAs are deathly afraid of being perceived as sales people, they have similar biases about insurance as the retail buying public and their compensation structure is different. On the other hand, insurance advisors are mostly optimistically transactional (which goes against the grain of the consultative CPA approach) and they are perceived as non relationship oriented professionals who, after they make their commission, will disappear without follow up. Let us try and unwind myth from fantasy because when the professional lines of clarity are redrawn, the combination of the CPA and insurance advisor is an extremely powerful and formidable planning team. Together, we are positioned to create more accounting business from existing clients, create more firm revenue with expanded services and enable more referrals for business development. Here are some examples of the synergy.

Advanced planning insurance advisors are sophisticated planners who use a consultative approach very similar to CPAs. We view each client as a new relationship. But our planning methodologies, although different are complimentary. As referenced, CPAs are now giving retirement planning advice but I have never heard a CPA approach a client retirement discussion and talk about future liability planning in the same breath. CPA conversations about wealth management are built around an entirely different conversation structure that does not deal with sophisticated pensions, insurance and product tax deductible choices. An advanced planning advisor retirement conversation is about dreams and goals, protecting accumulated assets and tax efficiency, separating out serious future money for post retirement health needs vs. happy money to play golf and go traveling with. In this illustration, when our professional advice has a cross over point, the insurance/investment advisor will clearly have a more compelling approach taking the baton from the CPA and building in multiple solutions and making the result multi-dimensional. Your high net worth and “A” list clients are demanding this type of attention from their “A” list class advisors.

Accountants are being asked to review life, disability and business insurance plans. How can an advisor that has had virtually no training in insurance products know how to objectively review these plans? Accountants have always been discussing buy sell planning with their business clients but even though they are the tax deductible specialists, CPA’s have never been able to effectively recommend tax deductible funded buy sell plans. CPA’s have some pension knowledge but 95% of the CPA’s I have spoken to have never heard of a 412i defined benefit pension plan, and those that do understand have attended insurance conferences for this knowledge. Lastly, when accountants do client estate planning, how will he/she know what insurance product to fund the trust with, or if the owner should be an iLiT or FLP? I have never met a CPA who knows how to recommend an FLP, tie it into a GRAT and then fund it appropriately with life insurance. This sophisticated business planning for high net worth clients is currently being outsourced away from the firm because of fee structure, misconceptions and the lack of alliance relationships with experts. When clients deal with other professionals for other business, the chance of losing a client to the competition has greatly increased.

The momentum for a CPA/Insurance Advisor alliance is clearly on the rise and is now. There is natural professional synergy and when the appropriate obstacles are addressed, the ability to do business quickly and profitably becomes a reality. Just because CPA’s are given the ability to license does not mean they will profit. Their ability to profit lies in a well constructed and conceived in house alliance with an advanced planning insurance advisor. This strategic partnership will capture more client business, develop more outside business, increase firm revenue and bullet proof a CPA client base from the competition.

About the author, Barry Goldwater
Barry Goldwater is the Principal of the Financial Resource Group and a 20-year veteran of the insurance industry. He focuses not only on working with the business and affluent clients of CPAs and attorneys, but also in helping CPAs form and develop a business model to include financial services. His expertise lies with using insurance and tax deductible solutions and their applications in the areas of Business Planning, Pensions, Retirement Protection Planning and Wealth Transfer Planning. He is an insurance specialist who is a member of the Bisys Exceptional Producer Group, the New York and Boston Chapters of the Estate Planning Council and he currently sits on the board of the Society of Financial Service Professionals. He can be reached at 617-527-9736 or [email protected]. His web sites are and

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