I don't enjoy grocery shopping. But at least my local supermarket makes it easy to find everything on my list all under one roof.
Suppose I had to go to one store for vegetables, a different store for fruit, then a separate butcher for meat and poultry, followed by a separate visit to the fish store, then a baker for bread and pastries, then an organic farm for dairy products. Ridiculous, right? But that's what many of your clients think to themselves when they ask you for advice about other areas of their financial lives beyond their tax return.
They don't want to have to go to half a dozen different professionals to have their complex financial needs met. They don't want to spend hours vetting different specialists, telling and retelling their story repeatedly to perfect strangers. They just want to go to one source — you — to have all their financial concerns addressed. You are your client's most trusted advisor. So why don't you consider becoming the quarterback or their virtual family office? Thanks to technology, it's never been easier to do so. More on that in a minute.
Where accounting, tech and wealth management meet
I've spent most of my career at the intersection of accounting, technology and wealth management. Sometimes I think clients have more confidence in their CPA than the CPA does. You know your client's business and personal financials inside and out. You know what they owe in taxes and why. You know intimately where their spending goes, and you may already offer basic ways for them to save on taxes. And you know who the most important people are in their lives. The trust is there. The data is there. Why aren't you there?
So, is it in your best interest to refer clients to financial planners or wealth managers, when you could be providing this advice yourself? Probably not.
The person who leads the client relationship usually has the greatest influence on that relationship because they see all the moving parts. Holistic advice involves looking at a client's entire financial picture — both personal and business — and providing integrated solutions that tie together tax planning, retirement planning, business succession planning, estate planning, charitable giving and so much more.
Wealth advisors certainly recognize the value of the holistic approach. However, I've long argued that wealth managers often don't engage with clients until there are substantial assets to manage. In contrast, accounting professionals often start working with clients much earlier in their wealth building years. They know their client's family situation, values, goals and concerns intimately. This is a huge advantage.
Holistic advice
It all starts with constructing a holistic financial plan for clients. As the cornerstone of the "Return on Relationship" methodology, the holistic financial plan unlocks a deep and meaningful understanding of a client's personal and business realities and goals. The ROR methodology sets the stage for wealth management services that can significantly boost your ROI.
3 ways to offer wealth management to clients
1. Become a solicitor/promoter. Here you refer clients to a financial services professional for a fee. In essence, you are monetizing the referral relationship formally with an outside investment advisory/financial planning firm that you feel is a great fit for your clients. You're not doing the actual work, but you're consistently referring clients to the trusted advisory firm for predefined monetary compensation.
2. Become an investment advisor representative at an affiliate registered investment advisor. Here your affiliate RIA firm can handle all the heavy lifting except for either the direct client relationship, or the actual planning levels. It depends on how your firm's structure and service model is set up.
3. Set up your own RIA practice. Here you have control of your entity, but you can outsource certain functions such as administration, compliance, technology and client wire transfers, etc. Again, as the most trusted advisor, you would handle client relationships and related planning aspects for them, serving as their chief strategist. However, you could hand off much of the tactical day-to-day tasks such as portfolio management, tax loss harvesting, RMDs, etc.
Obviously, I'm a big believer in No. 2 and No. 3 above since it offers the highest ROR/ROI and enables you to be the steward of the client relationship — i.e. the quarterback to their financial life. In the end, isn't it all about relationships? Isn't it all about the human side of advice that enhances your technical expertise? Isn't it about coaching and encouraging clients to make the required changes necessary in their personal and financial lives to have peace of mind and fulfillment?
Return on relationship
That is why I trademarked the term Advis-ROR, which refers to financial professionals who intentionally prioritize the ROR they generate for clients. This new metric and mindset forms the foundation of my forthcoming book "
Accounting industry strategist, consultant and editor Seth Fineberg told me on my podcast recently that the future of advice begins with having conversations with clients — when it's not busy season — to discuss their total financial picture. "These should be frank discussions of their worries and goals going forward. It's not about rehashing their financial history, which is what doing taxes is all about," noted Fineberg. "It's about having those important nontax conversations that makes you their trusted advisor. Establishing trust is what opens the door to having more meaningful conversations with clients, which can ultimately lead to providing them with wealth management and other services," Fineberg asserted.
Emily Koochel, head of financial wellness at eMoney, told me on my podcast that her organization did a study about the 21 actions found to be most impactful for clients. The top three advisor actions on the list weren't about generating higher investment returns for saved money on taxes. They were about the human side of money:
1. "My advisor helps me identify meaningful personal and financial goals and objectives."
2. "My advisor always considers what I value most in life."
3. "My advisor considers what I value most in life before they deliver financial advice."
You don't need a license or technical expertise to ask clients very basic questions about what they value and where they want to go in life. It's the foundation from which a client's business and personal decisions emanate. Once established, you have the ability to integrate service offerings that are personalized and that work in concert with each other. Hence the basis for the virtual family office.
The Advis-ROR philosophy is based on the VFO model. Thanks to advances in technology, a VFO can provide your clients with access to a wide range of specialists in accounting, tax, estate planning, insurance, legal, philanthropic, investment and administrative matters from anywhere in the country. They don't need to be salaried employees under the same roof as in a traditional family office. And since the overhead and cost structure is much lower in a VFO, far more families can benefit from their collaborative expertise. But no matter how many experts you bring in to assist your client, as their CPA and most trusted advisor, you own the relationship and remain the central point of contact.
ROR for higher-value advice
When you are overseeing multiple facets of a client's financial life, the relationship is inherently more valuable. As a CPA, if you let an outside wealth manager quarterback VFO services, your position (and influence) with the client is diminished. This might decrease the potential value you derive from the client relationship as well. It's analogous to having a controlling stake in a company versus simply having a minority stake. "Today we are cresting the biggest waves of change that I've seen in my 20-plus years of covering the accounting profession," related Fineberg. "I'm talking about the need for CPAs to go beyond simply being the trusted tax guy (or girl) for their clients and to help them manage all aspects of their wealth."
Don't have clients driving all over town to have their financial worry lists checked off. Give them a one-stop shop of solutions and guaranteed access to the express lane no matter how many items they have.
