CPAs Should Not Sell Investment Products

BY MICHAEL J. NOONAN

I believe “ The Most Misunderstood Investments ” ( JofA , Oct.03, page 17) demands a response. The letter chastised the JofA for publishing an article that was critical of annuities as retirement planning vehicles, claimed that annuities were “misunderstood” and later stated, “Many CPAs now have securities and insurance licenses and offer these products to their clients.” This is the ultimate example of why I think CPAs should not sell investment products.

The most prevalent reason in favor of our selling such products is that we know our clients’ financial situations, histories and preferences better than anyone else. Many CPAs follow this argument with: “I used to recommend investments, then pass the client along to another professional to close the sale. Why shouldn’t I be the one to get the commission, instead of giving it to someone else who doesn’t know as much about the client?”

CPAs who leverage their knowledge of their clients and the trust they put in us in order to make a commission are being very shortsighted. We will not be the most trusted professionals for very long if we lose our independence in our clients’ eyes. When we become commissioned salesmen, we lose status and trust, because no matter how much we protest to the contrary, it does affect our thinking and clients know that.

Michael J. Noonan, CPA
Joliet, Illinois

SPONSORED REPORT

How the election may affect taxation of business income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

Did you follow 2016’s biggest accounting news?

CPAs will remember 2016 as a year of new standards and new faces. How well did you follow the biggest accounting events? The 7 questions in this quiz will help you find out