Adding Financial Advisory Services

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#1
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How many of you have added financial advisory services, and are you happy you did so? Do you see any conflict of interest in doing so?
 

#2
Beagle  
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We did financial services and added tax planning and preparation to it. I see no conflict of interest and it's a good idea to coordinate both. Many of our financial planning / investment clients jumped at the chance of having me do their taxes when they first heard about it.

One thing I've learned, once you have a client who uses both of your services, they are your client forever. It's just too difficult to switch on a whim and so few firms do both.
 

#3
Preppie  
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I added tax prep to my financial planning business, does that count?
 

#4
smtcpa  
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I did about 10 years ago but I was with a broker/dealer who was more commission based and I hated the over-bearing regulation. I dropped it 5 years ago when I moved to CO. This winter I registered my own RIA and am 100% independent (yes, the regulation is still there but it won't be as over-the-top as my BD was doing). My hope is to eventually drop the client count down from 250 to 80 with a practice that does year-round tax and financial planning, investment management, and MUCH less tax work, especially during tax-season.

My mistake the first go-around, besides being associated with a broker/dealer, was not going all-in. There is a lot to learn and keep up with and I never got to a critical mass that allowed me to scale back the tax practice. IMO this is not a simple add-on to make a few thousand extra bucks. It requires dedication and some scale to make it worthwhile.
 

#5
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"I have an RIA" and it's a lot of compliance work and I was even audited in the middle of tax time.

I've had mixed results and I perhaps net about 20K extra each year (though it grows each year).

In hindsight, it would so far have been MUCH easier just to do another $20K in tax returns.

I dream of having $40 million under management from 40 clients as this would be an easy life as compared to my "day job" as a tax preparer.

But reality has been a different story.
 

#6
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ItDepends wrote:"I have an RIA" and it's a lot of compliance work and I was even audited in the middle of tax time.

I've had mixed results and I perhaps net about 20K extra each year (though it grows each year).

In hindsight, it would so far have been MUCH easier just to do another $20K in tax returns.

I dream of having $40 million under management from 40 clients as this would be an easy life as compared to my "day job" as a tax preparer.

But reality has been a different story.


I got licensed in 2002 and became a CFP almost immediately. I joined a group and used THEIR RIA and like you got off to a slow start. I maintained my own office away from theirs. BUT in 2011 got serious, stopped taking on new tax clients unless i managed their money or at least 100K. Pretty soon I got to 50K under mangament and then passed that. I now do only about 150 tax returns in total but … you can do the math at 70 mil in assets.

Selling the advisory business will generate a check of about 2 million.


Problem i would have solved earlier is stop letting clients think you are a bean counter.


If I were you…. I’d drop my RIA, pay a fee to a hybrid. I can introduce you to a good one.
 

#7
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I don't mind having the RIA now that it is set up and running, but from where do you get these clients?

I have "too many" tax clients and turn most new one's away. It's not like I can say, "OK, I'll do your taxes if you let me manage at least $50,000 of your savings".

I figured that I would have so many financial clients because my tax clients were always asking me about it.

It turns out that I end up setting up SEPs and other accounts and most clients do not follow through. Or they put $2000 in an account and I'm running it for $20 a year.
 

#8
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ItDepends wrote:I don't mind having the RIA now that it is set up and running, but from where do you get these clients?

I have "too many" tax clients and turn most new one's away. It's not like I can say, "OK, I'll do your taxes if you let me manage at least $50,000 of your savings".

I figured that I would have so many financial clients because my tax clients were always asking me about it.

It turns out that I end up setting up SEPs and other accounts and most clients do not follow through. Or they put $2000 in an account and I'm running it for $20 a year.


I learned that a 100K rollover will generate 1K of income.... BUT clients see you/us as haggered, tired CPA's. Look at a Merrill office. They are neat, clean etc.

I invested in upgrading my office, conference room some brochures and in EACH tax return I put a brochure. I have marketed myself as an expert on investment fees, I tout the benefits of indexing. If a client has 500K with me the tax return is free unless VERY complex.

I told clients... I only use Vanguard funds and American funds and I will NEVER put you in a fund that I do not have XXXK of my own money. I then showed them MY personal portfolio.

It wasn't sexy but I got from 10 to 50 million in 8-10 years.
 

#9
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southparkcpa wrote:
ItDepends wrote:I invested in upgrading my office, conference room some brochures and in EACH tax return I put a brochure. I have marketed myself as an expert on investment fees, I tout the benefits of indexing. If a client has 500K with me the tax return is free unless VERY complex.


@Southparkcpa - how do you get around the rules where disclosures have to be signed by clients ahead of you looking at their tax returns and what could be seen as refunding investment fees which the investor companies typically have strong rules against?
 

#10
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fatherof3 wrote:
southparkcpa wrote:
ItDepends wrote:I invested in upgrading my office, conference room some brochures and in EACH tax return I put a brochure. I have marketed myself as an expert on investment fees, I tout the benefits of indexing. If a client has 500K with me the tax return is free unless VERY complex.


@Southparkcpa - how do you get around the rules where disclosures have to be signed by clients ahead of you looking at their tax returns and what could be seen as refunding investment fees which the investor companies typically have strong rules against?


Without too much detail, I am the tax preparer for all except 2 of my advisory clients. The disclosures are a pain in the arse no question. I have to get my clients to sign basically, 2 different engagement letters. It’s a disadvantage but that’s what our RIA compliance group states as well as my state board of accountancy. I dont refund fees to anyone. I simply dont charge for a service if assets are at a certain level.
 

#11
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I'm afraid to have a website or to make brochures because I don't understand the advertising rules.

I know I can make a simple website/blog and drive a lot of quality traffic, and I wouldn't write about performance, etc, but I'm not sure if I'm allowed to do this.

Maybe I should seek out a lawyer for advice?
 

#12
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ItDepends wrote:I'm afraid to have a website or to make brochures because I don't understand the advertising rules.

I know I can make a simple website/blog and drive a lot of quality traffic, and I wouldn't write about performance, etc, but I'm not sure if I'm allowed to do this.

Maybe I should seek out a lawyer for advice?


There are many designers who have pre-approved web sites that are "Compliance Approved". That is, they know the rules and they charge you a fee each month to maintain the site.
 

#13
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Southpark, thanks for all of your help and guidance.

As mentioned, I have an RIA firm and passed the '65 and I am the representative of the firm.

I was looking into becoming a CFP.

As of right now, there's really nothing I can't do as a RIAR with a series 65, but of course it can't hurt to have the designation and to be more educated.

This is especially true if the states one day start requiring a CFP (could you imaging having $70 million under management and then your state suddenly says, "you can't do that without a CFP)?

Do you know if I would actually have to work for another CFP somewhere? Or would working for my own RIA firm count?
 

#14
smtcpa  
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I am going through this exact same process myself. I recently registered my RIA and am looking into the CFP for the education and the marketing. My understanding is that you can self-certify your experience but it has to be 6,000 hours. It is not 100% clear but your prior experience as a tax pro may qualify for some of these hours.

If you work for a CFP doing planning with the oversight of the CFP it is 4,000 hours.

ItDepends wrote:
Do you know if I would actually have to work for another CFP somewhere? Or would working for my own RIA firm count?
 


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