A New Way to Sell Financial Planning

One entrepreneur had to clear hurdles to help steer the profession into a lucrative niche.

Seven years ago, as Stephen A. Batman, better known as Tony, tells it, some of his friends began whispering that perhaps he was being a bit foolish. First, he had left a fast-track-to-partner position at Arthur Andersen to join a real estate development company. Two years later, he had jumped to brokerdealer H. D. Vest, Inc., one of the early brokerage firms to attract tax preparers to the securities business. And now, in 1991, Batman was again talking about moving. Although the idea of brokerages employing CPAs was fraught with controversy, frowned on by the accounting profession and prohibited by most states, Batman wanted to open another CPA-staffed brokerage in Texas, one of the five states where it was legal. He wanted to teach CPAs how to become financial planners, even salespeople. When friends and associates heard his proposition, they shook their heads in disbelief.

There were a lot of naysayers, Batman recalls. But in 1992, with two small children, mortgage payments and other financial responsibilities, Batman gave up a comfortable salary at Vest to start 1st Global Partners, an independent brokerage in Dallas. Its target market: CPAs eager to replace eroding traditional accounting services with financial planning. His plan: Develop training modules, software and a support network especially for CPAssole practitioners and firmswho would join 1st Global as affiliates. While just about anyone could hang out a shingle offering financial planning services, 1st Globals team would be limited almost exclusively to CPAs who could offer clients the added value of their experience in areas such as tax planning, financial statement analysis and accounting.

During his first year in operation, Batman struggled. He spent all of his savings and occasionally put the company payroll on credit cards. At first, the company attracted sole practitioners and small firms, but gradually larger firms began to sign on, and today 1st Global is booming. Among its 530 affiliates, the company counts 40 firms with annual billings of over $2.5 million. One-third of its affiliates have joined in the last 18 months.

As a result of his achievements, Batman was chosen as a pathfinder in the CPA Vision Process. He was selected because he took risks to grow professionally and developed a new service based on his own vision of the future. Batmans approach to starting a new business in an untested field is a case study for any CPAs considering striking out on their own in new business ventures.

Characteristics of a Pathfinder
  • Develops and champions a successful new service for a firm, employer or profession.
  • Plays a key role in making a new service successful.
  • Has the ability to grow a practice or expand services to meet employer needs.
  • Makes extensive use of technology and has plans to increase use as innovations become available.
  • Exhibits creativity and entrepreneurial attributes.
  • Is sensitive to othersshows understanding and empathy.
  • Has personal plan or vision for the future.
  • Is willing to take reasonable risks in order to grow professionally.

Source: CPA Vision Project Web site (www.cpavision.org).

Even as a teenager, while his friends were playing baseball, Batman sat inside reading books such as Think and Grow Rich . The eldest of four boys, Batman put himself through the University of Kansas at Lawrence and graduated with a BS in accounting in 1979. His father, who had never finished college, earned a decent living as an accountant for a large farming organization. I was influenced by my fathers work, Batman says. I knew accounting was a good profession.

After graduation, he joined Arthur Andersen, where he worked his way up to manager of audit services handling SEC clients. He credits the firm for the prowess he developed in communications and analysis. But colleagues looked at Batman quizzically when they caught him reading books on becoming a successful motivator. At Andersen, It was only the partners who got the opportunity to build business, says Batman, describing exactly what he wanted to do.

Seeing that his chances to do that at Andersen were still years off, Batman left the firm in 1985, at age 29, to become a CFO of Lincoln Property Co., in Dallasat the time one of the countrys largest real estate firms. For two years, Batman evaluated business plans and learned investment banking and the essentials of capital formation. When the property market fell into decline in 1987, he left Lincoln to join Vest in Irving, Texas, as one of four vice-presidents. Later, the company named Batman president of the fee-based portfolio advisory division, known as H. D. Vest Advisory Services, Inc.

Serving institutions and wealthy clients, Batman pioneered large-scale wrap fee programsinvestment plans allowing Vest affiliates to offer a fee-based alternative to charging commissions that up until then was the primary source of revenue for the financial planning industry. As an officer, Batman participated in marketing, operations and financial affairs, which offered him the fundamentals he would later rely on at 1st Global. During my five years there, I realized that tax professionals could become major players, if not the dominant players, in the American financial services landscape, he remembers.

Time and again, Batman would hear stories of people disappointed by deals made by Wall Street firms and insurance companies. He realized the consultative approach CPAs take to solving their clients problems could help those clients put their financial lives in order. At the same time, he heard CPAs complaining about their weak sales skills and lack of training on insurance, mutual funds and other financial products.

Batman left Vest to launch 1st Global Partners in April 1992. Jim Ainsworth, a CPA and Vest colleague, signed on as president and proved to be an experienced partner. Ainsworth had spent seven years establishing his own CPA practice and experimenting with offering clients financial planning services. Ainsworth agreed to develop the training sessions based on his own knowledge and lessons he had learned through the trial and error of becoming a financial planner.

When Ainsworth began offering financial planning services to clients of his own small accounting firm in Commerce, Texas in 1976, he developed the plan and then called in a teaman insurance agent, a stockbroker and a lawyerto implement it. He knew little about insurance and investment products, and barriers in the CPA profession prevented him from selling them. But although he did the bulk of the work, the others made most of the money. For example, for one client, Ainsworth provided the financial plan and the product evaluations. For all that he earned $1,800; the attorney made $5,000, the stockbroker collected $38,000 and the insurance agent pocketed $42,000. Something was definitely wrong with the system, writes Ainsworth in The Recipe , which is distributed to new 1st Global representatives.

Worse, Ainsworth realized that by bringing in others, he had lost control of his relationship with the client. At the behest of the stockbroker or insurance agent and under the false belief that Ainsworth had approved, some of Ainsworths customers had purchased investment products he never would have recommended. I had to find a way to fix the system or stop doing financial plans, Ainsworth explains.

When Batman teamed up with Ainsworth, they set out to change the system. Batman started off by writing a business plan outlining his vision: a new way to deliver financial services and products through a select group of CPAs and tax advisers that he would equip with training, marketing tools and innovative technology. To prepare for any surprises, Batman covered all the possible scenarios that might play out in the next five years. In his head, he went over different ways of setting up and running the business until the concept became a fire in my belly, he recalls. When he faltered, he turned to a quotationAll great living commences with a persons quiet realization that he or she will not play the cowards roleon a slip of paper he had kept in his wallet for 20 years.

Looking back over his experience for some lessons, Batman suggests other prospective entrepreneurs think carefully about their motives and honestly assess them. If it is simply to create a job for him or herself, forget it, Batman advises. Its not worth the time and angst that go into establishing a start-up. Batman believes every entrepreneur must have a vision for a business that will live in perpetuity and give lasting value to all stakeholders long after its founder has retired.

Today, 1st Global maintains an independent contractorvendor affiliation with its representatives. To join, reps pay a nominal fee for certain licenses as well as a monthly fee for training and insurance. New affiliates go through a 12- to 18-month training program offered at 22 centers nationwide. First, theyre licensed to sell stocks, mutual funds and other financial products. 1st Global also recommends they become licensed to sell insurance. Many reps end up with as many accreditations as Batmanwho is a CPA/PFS, chartered financial analyst, certified financial planner and certified investment management analyst. 1st Globals training also covers the insurance and securities products the reps sell as well as the best firms to buy from depending on a clients needs. Affiliates can subscribe to 1st Globals software, which covers portfolio design and account monitoring. The company also offers a support network of CPAs with different areas of expertise to whom representatives can turn for advice. Although 1st Global makes some money by selling its training modules and software, its real profits come when CPAs split their financial planning fees with the company.

Of all the training 1st Global affiliates receive, the toughest for CPAs to master is learning to sell. Early in his career, Batman looked at those accounting firms earning $500,000 per year per partner vs. those bringing in $80,000 per partner. The very successful firms employ people with extraordinary human influence skills, he says. Accordingly, 1st Global doesnt teach CPAs how to be product peddlers but, instead, tries to show them how to persuade clients to make certain choices to attain financial independence. Some CPAs fail to learn these sales techniques and drop their affiliations. CPAs dont like the S (or selling) word, observes Batman, who prefers to call it human influencing.

1st Global encourages its studentsCPAs and other affiliates new to financial planningto reassess their view of the sales process. The company tries to convince its reps that certain types of salespeoplesuch as some of those hawking used carshave given sales a bad reputation. 1st Global wants its students to regard themselves as the kind of salespeople who build long-term relationships with clients they care about.

Were talking about doing what it takes because you love your clients and know that they have got to get their financial security act together, Batman says. Sometimes this means injecting feartheyre going to be eating cat food some day rather than caviar, he explains.

In addition to having to change their perceptions of sales, some 1st Global affiliates also bristle at the idea of earning commissions. Batman agrees a commission-based transaction is a conflict of interest, but he points out that such conflicts are ubiquitous in a capitalistic system. A form of compensation should never jeopardize someones independence or objectivity, he says. If someone is so fragile that he slips onto the dark side because of a commission, he probably has other serious troubles in his life. Whats more, he says, some argue that even CPAs performing audits can never be completely independent because the client pays the CPAs fee. 1st Global demands its affiliates clarify their relationships with clients upfront and explain how the companys compensation system works.

The final step 1st Global takes in turning its affiliates into financial planners involves changing their attitudes. Sessions cover the merits of goal setting. CPAs, who often see themselves as recordkeepers, are taught to plan for a clients future. 1st Global constantly reminds new affiliates of the key skills they possessin accounting, tax planning and financial analysisthat make CPAs better suited to the role of financial planner than others, such as insurance agents and investment brokers. New representatives learn to turn clients monetary needs and goals into financial blueprints. Affililiates also review ways to monitor their clients progress in implementing those outlines.

The success of 1st Global has provided several challenges for Batman. He spends almost one-third of his time on the road. As his firm has grown, his responsibilities have changed. Today, with so many affiliates, he concentrates on building the leadership skills necessary to hold together a disparate and geographically far-reaching group. Whats more, the concept behind the fast-growing firm remains controversial, and Batman constantly finds himself lobbying practitioners and regulators to change the way they think about financial planning services.

Significantly, the law in most states is now on 1st Globals side. A decade ago, state laws and accounting ethics rules banned CPAs from registering as securities brokers in all but a handful of states. Today, 35 states allow CPAs to earn commission-based compensation.

For this reason, Batman calls 1997 a watershed year in the accounting community. And with the confidence of one who believes that good things truly do come to those who wait, he believes many of the other states will still turn around. Ive been out there lobbying and selling and waiting for it to happen, he says. Many great ideas begin as blasphemy. But now the whole profession is finally embracing financial planning.

Weld Royal is a freelance writer based in New York City. Her articles have appeared in the New York Times, Europe magazine and on Christian Science Monitor Radio.


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