Starting an Investment Advisory Practice
MONTHLY CHECKLIST SERIES
Advisory Practice
For many CPAs, becoming an investment adviser is a smart decision. Even after deciding to become one many people will still have questions. This checklist offers help to CPAs who want to establish their own investment advisory firms.
Do client research. Get reactions from some of your current accounting clients about your proposed investment advisory services.
Research the competition. Make sure the local investment community is not threatened by your expansion plans. (Some clients will always need a full service broker to provide certain services.)
Assess your skills. Evaluate the abilities of partners and existing professional staff to advise clients on their investments. If necessary, obtain additional training or hire appropriate new staff.
Get outside help. A variety of resources are available to help you start an advisory practice. For example, the AICPA Center for Investment Advisory Services can provide information about alliances with National Regulatory Services, Securities Training Corp., Investment Management Consultants Association, Fidelity, Morningstar, Ibbotson and others through its Web site at www.cpa2biz.com , or by calling 877–66–AICPA
Find a business model. Review your proposed level of investment planning activity and decide whether you will offer investment advice on your own or affiliate with another registered investment adviser.
Create a business plan. Develop a plan to help identify where you are going and how you will get there. It should cover your target market, the specific services you want to provide, your operating structure and an estimate of start-up costs. Determine a target date for the official opening of your new venture.
Get compliance right. Ask your state securities department about the current regulatory environment, including examination, registration and recordkeeping requirements. Develop policies and procedures to ensure that your firm complies with applicable SEC or state requirements. Prepare form ADV with legal help.
Manage your risk. Determine the cost of errors and omissions insurance and other types of coverage. The AICPA Professional Liability Insurance Program can help AICPA members identify and manage the risks associated with providing investment advice. Contact your local representative or call Aon Insurance Services at 800–221–3023.
Select a back-office provider. Choose an entity to serve as your broker–dealer to execute transactions and act as a custodian for client assets. Get a clear understanding of the process involved in opening accounts and begin transferring client assets.
Find the right practice management tools. Choose software and other tools to use in selecting, managing and reporting client investments. This may include products to help with mutual fund selection, asset allocation, performance reporting and related activities.
Decide how you will market your services to existing and prospective clients. You may wish to develop a formal strategic marketing plan as well as other more informal ways of approaching existing clients.
Get to work!
Source: AICPA Center for Investment Advisory Services.
