Here we are, over two years since we received the COVID-19 shock and the wealth management business has thrived. To my surprise, some firms have grown their wealth management business and some firms have not. Circumstances may reveal why, on a firm-by-firm basis, depending on your client base or niche specialty. Whether you’re a niche firm or a firm that serves many industries, your clients’ needs for wealth management have only been exacerbated during this crisis. Vulnerabilities have been exposed; mortality and disability are topics that people want to talk about; and a look back at the market meltdowns again has clients asking whether they did the right things and what they should be doing now as the pandemic blends into our reality with a whole new set of risks emerging.
Many firms will be getting back to their strategic plans and vision now that tax season is over. This year, be sure to make wealth management a material part of those sessions. To sustainably grow a wealth management business within an accounting firm, you have to set yourself apart from all of the noise that financial firms make touting themselves as the best choice. What can you do to be distinct, and do it better than any of the major firms who pay millions for branding and wallet share from your clients?
To voice your distinction, there are two major parts. First is to communicate that distinction. Second is to deliver the service at a high enough level to exceed both expectations and the level of service they’ve ever received from any financial services professional.
For the communication side, I wouldn’t recommend that you go out and sponsor major golf tournaments, unless you already do that today. High-end wealth management isn’t a service that needs broadcasting; narrowcasting your message to your existing client base is the best place to start a serious growth campaign. All of your clients and staff should know about your wealth management division. Employees of the firm should be able to espouse the firm’s mission and know as much about that division as they do any other division.
Next, all of your professional contacts and alliances need to know about your wealth management services. This makes some firms nervous, because some of their best clients and referral sources are other financial professionals. This is frequently seen as problematic to the CPA, but to the other financial services professionals, it may be a benefit. It can be a benefit in that, as your knowledge and division grow, there may be resources that you develop that are not available from your clients’ outside advisors.
You have one major strength that is the major weakness of most financial firms. Have you ever read the fine-print disclosures that many financial firms must make to suit their chief compliance officer or their errors-and-omissions insurer? In effect, they say that they can’t give tax advice and that the client must see a tax professional for advice on taxes. Could it get any better than that? The financial services industry is telling their (and your) clients that they need to seek counsel from a good CPA if they want tax advice.
From there, it’s easy to relate the other moving parts in a financial plan and how your clients will benefit from your comprehensive oversight of all moving parts, including those formerly serviced by their current advisor.
If you do a great job on the first two ways to communicate your wealth management division, you may never have to look for another new client again; they will find you. Your services have the potential to become an attractant for the overall firm.
To support this, you would also need a robust social media presence as well as a decent website. Clients will appreciate any thought leadership that your firm publishes and will use your online presence as a way to corroborate their feelings and opinions about your firm and the services you deliver. It also serves as a way for your current clients to give friends and family a way to learn about your depth of services.
Your internet presence is your bridge to external communications, and should assist to devise a communication plan to attract the right clients without being aggressive marketers. A marketing and communications specialist can walk you through that exercise. When you begin this process, communicate from your core of who you are today and who you serve. You really don’t want to be all things to all people when you are the wealth management division of a CPA firm. You want to be great to your best clients and replicate them through a good communications plan. For now, I’m talking about communicating your message to ideal prospective wealth management clients. Later, I’ll talk about communications to clients during and after the planning process to distinguish you from most prior experiences that your clients have had.
Now the hard part: delivering what you have communicated. Telling someone face to face or on your website how your clients benefit from your advice is one thing. Doing it is what distinguishes the best advisors from the rest. To deliver wealth management, like any other division in the firm, you need to invest in technology, talent and wisdom. The top-growing teams distinguish themselves in a few ways. Most common is the depth of service and the composition of the team.
To that end, do not deviate from who you are today. If you hire a broker or salesman to sell wealth management services, you are getting just that. Hire professionals who are credentialed, with a demonstrated background in financial planning, with proficiency in some of the more common technology tools used by top-tier wealth management firms. These existing top firms have an employee model fairly similar to the CPA firm model.
Today’s fastest-growing teams have partners, with levels of professional staff and subject-matter experts readily available. A career path to being a senior team member or a partner is well defined and possible in these firms. For the accounting firm to make that a reality, growth is mandatory.
Today’s top teams acquire talent. The pace and volume of retiring wealth managers is expected to rise. This may be an opportunity for a progressive CPA firm that is serious about growth to accomplish two objectives. One is to recruit teams of experienced wealth managers who can also service your clients, and second is to acquire clients who fit the firm’s ideal client profile.
What the client wants
To create a great client experience, exceeding expectations is what it’s all about. The client has their own expectations based on their prior service experiences with financial services professionals and your firm. The firm should establish expectations from staff as you would in the accounting firm for engagement standards and scope of services.
My advice, as always, is to blow away the rest of the universe of financial services professionals with exceptional wealth management/family-office-style services. Leave no stone unturned and make sure that each and every detail of your clients’ financial life is in order and stays that way forever. To do that takes great talent, but also time. I estimate that for a client with a few moving parts and a $10 million net worth, you will spend upwards of 60-plus hours in the first year. For the higher-net-worth client with businesses, real estate and other complications, you may spend a lot more time.
It may take a while before you build the subject-matter expert bench within your firm, so be ready to go virtual, and enlist the help of other subject-matter professionals whom you’ve come to respect. My team, for example, would get the clients’ permission to work with a property and casualty agent to help read policies and diagnose areas for improvement.
If you are asking why it takes so long, the answer lies in the details. How, for example, can you give advice on risk management if you haven’t read their property and casualty policies? If they own a business or investment real estate, there may be many policies that you need to review to ensure that you’ve done your job. The same answer applies when talking about estate planning or business continuity. You can’t help in those areas unless you’ve read and understood the underlying documents.
This is where you need to understand the metrics of smaller clients. They may take as much time as some of the big ones and your realization rate may be substantially lower. You can decide to help everyone or find another financial professional who may be better suited.
I’d be remiss if we didn’t have a conversation about leadership. Regardless of the size of the firm, the wealth management division needs leadership. A dedicated partner who isn’t distracted by tax season or other A&A obligations is ideal. Don’t worry — you won’t forget what you know and you’ll still be viewed as your clients’ accountant if you’re a leader who has been groomed from within.
If your firm is big enough, consider leadership from outside the firm. In many cases, you may actually find that talent through an acquisition or by using a professional search firm. While your ideal candidate should have a proven track record in wealth management, they should also understand everything about the CPA firm culture and ethos. When searching for a leader, approach it like an M&A transaction, looking for a 1 + 1 = 3 scenario. The leader must have an opportunity that can be good for the leader, the firm and your clients.