Financial services companies have been competing with CPAs in the accounting and tax business for years. Many CPAs are or are in the process of becoming licensed investment advisors. As a Financial Advisor, you may find yourself avoiding a CPA who list financial services or specialty insurance licenses on their websites. It’s easy to assume that the “most trusted advisor” badge automatically goes to those whose title includes those 3 little letters.
This week I’d like to focus on why things aren’t always as they seem. Just because a CPA might be licensed or appear to practice financial advisory services doesn’t mean they cannot be a valuable addition to your team and help you grow your business.
The first thing you’ll need to ask yourself is: Why do CPAs venture into other services in the first place?
Believe it or not, CPAs fall prey to salesmen. They often hear and believe the promise that they will make more money by offering financial products to their existing clients. They are convinced that all of their business problems will disappear the moment they pass a licensing exam or list financial services on their homepage.
However, the majority of these CPAs never fully launch their advisory business. In fact, it’s common to find CPAs or EAs jumping ship on their financial services plans very shortly after they begin. Here are the most common conflicts we see and why most CPAs will not have a problem giving up the service in favor of working with a qualified advisor.
- Most are not passionate about offering financial services. In fact, many tax pros only offer financial services to their clients in the hopes of solving their problem of having way too many low priced clients. Once they realize that people are not lining up to buy these new services, they will see it probably was not a feasible solution in the first place.
- They Don’t understand that financial services is a sales-driven business. CPAs are notoriously introverted, shy, and generally, lack social skills and outgoing personality needed to be good at sales.
- CPAs often view offering financial services as a conflict of interest. Most CPAs were grilled during their training days about the importance of remaining unbiased and independent in bringing solutions and opinions to their clients. Some find it difficult to get past this viewpoint in order to offer other financial services. CPAs are also required to make disclose to their clients that they are receiving a commission for advising about specific solutions. This often makes CPAs so uncomfortable that they will never actually sell any extra products or services.
- It could ultimately damage their position as their clients’ trusted advisor. Finding the balance between the requirements of a CPAs job and those of a Financial Advisor’s can be difficult, and as mentioned above, can often feel like a conflict of interest. CPAs have to maintain their position in their clients’ life as the trusted tax advisor and that can be hard to do if they step out of that role.
- Most fear that adding financial services to an already “taxing” business will break the balance. Most tax pros are overworked and under-staffed. Adding another service to their list means ramping up time and money spent training, not to mention the extra work required to actually provide those services. Most solid investment and/or insurance professionals invest years in training and prospecting to develop a business. When CPAs are short of people today, what will happen when their attention is split between even more things?
- Most lack proven sales experience and proactive relationships with their clients. To establish a serious financial services business, one must focus on building sales volume into the business. The most successful advisors can make persuasive arguments for their products and services. The majority of CPAs simply don’t have the selling skills to regularly contact their clients, make recommendations to them and ask them to buy. There is a difference between answering a client’s request for services and pro-actively developing new business. Many CPAs do not want to sell or appear to be persuasive with their clients.
Remember, CPAs are not your competition, even if it sometimes feels like they are. If your referral strategy depends on a CPA changing their business model or the way they work, you may be better off developing a new strategy of working with that CPA, or possible consider seeking out a CPA to work with that complement, rather than compete with, your business.
It has been our experience that harnessing the natural tendencies talents, or financial advisors and CPAs leads to productive and satisfying growth in both businesses. Next week, we’ll talk a little more about the benefits of harnessing the strengths of the CPAs you work with and how to do so in a more effective way.
