As a CPA and an investment broker, I believe I can offer a unique perspective on the subjects of retirement planning, asset allocation and the role of the CPA in these two areas.
CPAs considering entering these areas need to know they are more difficult than they look—more art than science. Providing a valuable service to your clients requires full-time pursuit, not a part-time effort to boost billings.
In the article "Don't Put All Your Eggs in One Basket" (JofA, Jan.99, page 24), the authors recommend using no-load mutual funds as the investment vehicle to implement retirement investment plans, stressing their low costs. Using this logic, taxpayers should avoid CPAs and tax attorneys in favor of other, less expensive tax preparers, or they should do it themselves using one of the many inexpensive tax preparation computer programs that are available.
With many of the leading load mutual fund families, retirement plans with substantial existing balances and ongoing contributions may qualify for discounts (breakpoints) and many today pay no load whatsoever. These excellent funds can be accessed, with the assistance of an experienced investment broker, at a cost comparable to that of a no-load fund.
Cost is an important factor in any business decision, but it is only one of many. If it were the most important factor, the purchasing department would be the path of choice to the executive suite. I think we all know that's not true.
Thomas W. Hagedorn, CPA