In the Clients Best Interest

CPAs who consider financial planning a viable and honorable service, and have devoted resources to it, have been rewarded for their vision and hard work. As a practitioner of comprehensive fee-only financial planning since 1982, I consider myself in that category.

As such, I feel compelled to respond to the assumptions and conclusions promulgated by a survey in a recent JofA advertiser insert on the benefits of CPAs’ partnering with outside providers of financial services and products. The thrust of the message was that financial services are a profitable niche for CPAs and using outside financial service providers makes it even more profitable. The insert states: “Without the direct costs and overhead associated with employees, nearly all (emphasis added) their (CPA firms) financial services revenue will end up on the bottom line.”

The business model being promoted allows allied financial service and product providers to tap the wealthy client list of a CPA firm. In return the CPA firm receives a stream of significant income without having to dedicate any, or minimal, employees or resources. This is a sweet deal for everyone except the person most affected by the arrangement—the client.

The client’s assets and income stream must absorb the impact of expenses from the allied financial service and product sellers in addition to the fees “earned” by the CPA. Isn’t it reasonable, if not probable, that this extra layer of fees will unnecessarily handicap the client’s ability to reach his or her financial goals? Expense management by clients has become even more important in this era of diminished return expectations.

CPAs seriously considering entering into such alliances should question their ability to do so while still adding value and acting in the best interest of the client. Our position as a trusted adviser took years to establish. Carefully consider the risks of losing that trust if partnering with sellers of financial products results in wealth erosion instead of wealth enhancement.

Vincent A. Schiavi, CPA/PFS, CFP
Schiavi + Company
Wilmington, Delaware