Rise of the Accountant-Adviser

A growing number of CPAs want to manage more than just your taxes. Should you let them?

By JILIAN MINCER

As some consumers no doubt discovered during tax season, the tax men and women of America have set their sights on more than your 1040. With offers of financial planning services, they increasingly have something to say about your 401(k), your 529, and the rest of your financial life. After all, they already have an important piece of the picture. Is it smart to let them have the rest?

Attracted to the idea of a 12-month clientele, a growing number of CPAs are refashioning themselves as more well-rounded financial advisers. Some 5,000 CPAs now boast a "personal financial specialist" credential, up 28% since 2008, and another 7,650 accountants are now certified as financial planners by the Certified Financial Planner Board of Standards. Meanwhile, nearly a third of the 600 CPA firms recently surveyed by financial services researcher Bay Street Group now offer or plan to offer financial planning, investment advice, and other so-called wealth management services, with or without the extra designation.

For consumers, the pitch is in part the convenience of having one adviser, instead of two. But accountants also argue they're better qualified than other kinds of financial advisers. Just becoming a CPA is a long road the designation typically requires at least 150 semester hours of college coursework, passing the Uniform CPA Exam and at least two years public accounting experience and adding the "personal financial specialist" designation takes another 80 hours of financial planning education, two years of financial planning experience, and a final exam. By contrast, certified financial planners must have a bachelor's degree in any field, take a CFP Board registered program (equivalent to 15 graduate or undergraduate hours), and pass a final exam. Even the CFP Board acknowledges the value of CPAs' experience, with or without any additional financial planning studies: They're often allowed to waive the coursework and experience requirements needed to become a CFP, and skip right to the final exam.

But some critics say the very same qualities that make CPA advisers appealing to some clients may not be an advantage in selecting specific investments and managing portfolios. "CPAs tend to be more conservative, and they do not feel as comfortable with investments in general because there's a lot of liability," says George Papadopoulos, who was a CPA for several years before becoming a full-time certified financial advisor in Novi, Mich. Others argue that some math-minded CPAs, used to working behind ledgers and tax forms, may lack the empathy and social skills to work with clients through tough life decisions to reach their financial goals.

It's an option CPA clients are likely to face. The number of CPAs turning adviser is showing no signs of slowing. Many accountants have figured out that year-round planning services and portfolio management often for a percentage of assets under management can lead to steadier and higher income than commission-only tax-preparation services, and many see advisory services as a natural next step for growing their businesses, says Rick Telberg, president of Bay Street Group. As it is, a typical consumer-focused CPA at a mid-sized accounting firm earns about $82,000 annually, providing tax-prep services for individuals and small businesses, according to a recent survey by the College for Financial Planning. Financial advisers with a CFP designation often earn more than double that, the survey found.

How to decide? Ultimately, it may not be as clear-cut as a credential might make it seem. Though there's a wide range in what financial planners and adviser-accountants charge an initial plan can cost anywhere from $1,500 to $6,000 it's not clear that either group consistently charges more than the other. After the initial plan, both types of advisers usually charge a percentage of assets under management, typically 1% for up to $1 million and then less for additional assets. More important, says Robert A. Clarfeld, president of Clarfeld Financial Advisors in Tarrytown, N.Y., is usually the relationship, and as always, experts recommend meeting more than one prospective adviser before signing up.

Some consumers have already made the switch. A few months ago, Lesli Riehemann, a 41-year-old owner of a manufacturing business, dumped her financial adviser of ten years after deciding he was too focused on picking investments and ignored her family's total financial situation. She replaced him with her accountant of four years, who won her over by creating a financial plan that included long-term goals like savings for kids' college, she says. "I really, really liked the idea of one person who could see the continuum of my financial situation," says Riehemann.