in a bear market, cpas need to know.
and then they need to help clients fine-tune the risk, according to bert schweizer iii, cpa/pfs.
schweizer is a principal and founder of buckingham asset management, llc, a registered investment advisor firm in st. louis. he is also a principal and founder of bam advisor services, llc, a comprehensive service provider for registered investment advisor firms across the country.
prior to forming buckingham, bert worked for kpmg peat marwick and served as principal and shareholder with the cpa firm of pasternak, schweizer & co., p.c.
he has more than 30 years of experience in accounting and personal finance and is a frequent speaker on the topic of cpa-based investment advisor services. his experience includes numerous aspects of accounting, tax and consulting for individuals and closely held businesses, including estate and retirement planning, business planning, mergers and acquisitions, business valuations, marital dissolution, tax and financial planning, and expert witness testimony.
we peppered schweizer with a few hot topics.
1. short-term, what should cpas be doing in this economic environment to best help their pfp clients?
cpas should focus on helping clients control what can be controlled, and understand that neither they nor their clients can control the markets.
cpas can help their clients
- to remain disciplined and maintain globally diversified equity portfolios combined with short-term high-quality bonds,
- to transfer assets for estate tax planning purposes while asset values are lower
- to consider terminating high cost variable annuities
- to help their clients keep a long term view and make sure the clients properly assess their need, ability and willingness to take risk.
2. long-term, what’s the outlook for cpa pfp services?
cpas are well positioned for their clients to understand the value of the quality advice provided by a trusted cpa advisor. with the change in the “wirehouse” environment and resulting distrust of “wall street,” fiduciary-minded cpa planners are positioned to be a leading wealth manager.
3. and how can cpas best seize those future opportunities?
they should be asking clients for referrals and meeting with strategic centers of influence such as private client attorneys to let them know the value added services that they provide. the cpa should communicate that they manage client relations not money and the goal should be to work on a well thought out plan, not focus on market performance.
4. what’s the biggest misconception cpas may have about adopting or expanding their involvement in pfp services?
the value clients need is not in picking stocks or timing markets, but focusing on what the cpa advisor can control, which is:
1. preventing clients from making mistakes,
and
2. planning for
- wealth enhancement
- wealth transfer
- wealth protection, and
- charitable planning.
5. what else should we be asking?
cpa planners should ask how the client is feeling about bear markets… what are the emotions, what are the concerns?
cpa planners should ask and make sure that the client understands the risk of owning equities and that if periodic risk did not show up in clients’ portfolios, clients would not receive the long-term expected compensation for owning equities.