Survey: Financial planning services help firms retain clients, increase revenue

Adding personal financial planning (PFP) services can help a CPA firm attract and retain clients and increase its revenue, the AICPA’s recent Economic Benefit of PFP Services survey found.

Almost half (49%) of the CPAs who responded to the survey said their firm offers PFP services. Of those that offer PFP services, 91% also offer other services to clients, while 9% exclusively offer financial planning. More than 2,400 CPAs responded to the survey.

Sixty-three percent of respondents in the survey who had added PFP services to their firms’ other offerings said doing so improved their ability to attract new clients.

Financial planning draws new clients because there’s a great untapped need for it in the marketplace, said Susan Tillery, CPA/PFS, president and CEO of Paraklete Financial and chair of the task force that produced the survey. Baby Boomers seeking assistance with retirement planning are driving the increased demand for financial planning. Plus, as tax compliance and investment management turn into commodities, integrated planning in the areas of retirement, estate, tax, investments, and risk management becomes a value-added service.

But clients across all generations want more from their CPAs, said Jonathan Gassman, CPA/PFS, the CEO and founder of The Gassman Financial Group and co-founder of wealth management firm G&G Planning Concepts. “They are looking for independent, objective advisers to help them make smart choices about their money,” said Gassman, who also is a member of the survey task force. “CPAs are probably in the best position of any type of adviser to provide this kind of counsel, because of our wide experience and knowledge of areas like tax, estate planning, and cash flow planning.”

Financial planning services also help firms hold on to clients, the survey found. When asked how such services changed their relationship with clients, 65% of respondents who had added PFP services to their offerings said it expanded the scope of services and engagement with their clients and 54% indicated clients’ appreciation of their services increased. Financial planning increases retention, Gassman said, because it allows firms to have a “stickier” relationship with clients. “It enables you to make a bigger difference in their lives beyond just meeting their tax needs,” he said.

The survey also revealed that PFP can make firms more profitable. Seventy-nine percent of firms that offered PFP indicated that they were profitable in their first year of offering these services. Gassman said that financial planning improves profitability because “it’s a great diversifier of revenue sources.” Changes in the marketplace, such as the growing popularity of tax software, have caused many firms to consider new means of revenue generation, and financial planning is one such opportunity.

Survey finds that financial planning can be a good investment

Firms that consider tax work their bread and butter are sometimes wary of adding PFP to their offerings. “They fear that offering financial planning will cause them to become distracted or perhaps lose their objectivity and lose their clients as a result,” Tillery said. “But the exact opposite happens. Firms offering financial planning have higher client retention.” Eighty-three percent of the CPAs surveyed who offer both PFP and other services said that they never or rarely lost tax clients due to financial planning-related issues.

The study also helps dispel another common misconception about PFP: that it’s all about wealth management. “Many CPAs don’t offer financial planning because they don’t want to manage assets,” Tillery said. But only 28% of respondents offering PFP services named investment management as one of their top five sources of financial planning revenue, underscoring the importance of offering a broad range of services. The most profitable PFP services, according to the survey, were tax, estate, retirement, investment (when combining investment management and investment planning), and cash flow planning.

How to add financial planning services

CPAs interested in adding financial services to their firm should conduct some research first, said Tillery and Dan Snyder, CPA, technical manager for PFP at the AICPA. The AICPA Personal Financial Planning Section offers resources to help firms develop their PFP services. CPAs also can improve their competency in financial planning by attending classes, conferences, workshops, or networking events about PFP, such as the upcoming AICPA Implementing Personal Financial Planning Services seminar Jan. 17–18 in Las Vegas.

While working on this initial research and education, CPAs need to pick a business model. Some firms choose to focus solely on the planning services. Others include asset management or sell investment or insurance products alongside their planning services. Some even partner with other firms or experts to gain additional technical, marketing, and compliance support for the services they choose to offer.

Tillery’s company doesn’t offer investment management or sell products, which, she said, is a good business model for firms new to financial planning. “It’s a great way to gain expertise and focus on integrated planning,” she said, noting that CPAs can add product sales or asset management later if they choose.

Snyder said some firms can implement financial planning by repackaging services they already provide. For example, four of the top five sources of financial planning revenue identified in the survey—estate, retirement, tax, and cash flow planning—are services many CPAs already offer. Bringing these services together under the umbrella of PFP and letting clients know that they are options can help firms emphasize the value of these services and expand what they offer each client.

“All of these services go together,” he said. “Instead of having a one-off meeting with clients about tax, for example, you can show them how their financial decisions about tax affect their retirement, estate, and charitable concerns.

“You can make recommendations for them in light of that bigger picture,” he said.

But the best reason to provide financial planning, Tillery said, is that it makes such a difference in clients’ lives. “CPAs enjoy it because their clients are so thankful and appreciative,” she said. “Clients are educated and have their financial house in order, which creates an entirely new type of relationship with them.”

—Courtney L. Vien (cvien@aicpa.org) is an associate editor at the AICPA.