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!
