remember, your current clientele is not the whole picture.
by russ alan prince
your $5-million high-net-worth practice
not all accounting firms are interested in establishing a wealth management practice. it does not fit well with their strategies and culture. moreover, a great many accounting firms would not be successful in providing wealth management services and products. consequently, a percentage of accounting firms smartly choose not to get involved in delivering wealth management.
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then there are accounting firms that choose to be in the wealth management business. when wealth management is part of a well-thought-out accounting firm’s strategy and is implemented well, it can be instrumental in delivering greater value to clients as well as substantially increasing accounting firm profits.
“when a wealth management practice is done right, the accounting firm benefits from a firmwide multiplier effect,” says anthony glomski, principal and founder of ag asset advisory family office and co-author of your $5 million high-net-worth practice: guidelines for sourcing and working with the wealthy during the covid-19 crisis and beyond. “clients are better served, which is always the highest priority. at the same time, the accounting firm’s wealth management practice generates substantial revenues, other practice areas benefit from the additional business, and new clients are consistently referred in. to date, while many accounting firms have established wealth management practices, only a small percentage of them have achieved anything close to their potential.”
the first decision is to determine if wealth management makes sense at your accounting firm. to garner the greatest success, it is regularly necessary to align all the resources and support of the firm’s partnership. if everyone agrees on the strategic vision, implementation becomes comparatively straightforward. some of the questions that you need to answer are:
- should the accounting firm be in the wealth management business?
- what precisely do we mean by wealth management?
- do the partners want to have a wealth management practice? and, if they do, why?
- what concerns do the partners have with establishing a wealth management practice?
according to homer smith, managing founder of konvergent wealth partners and co-author of optimizing the financial lives of clients: harness the power of an accounting firm’s elite wealth management practice, “in helping senior management at accounting firms decide if wealth management makes sense in their situations, one of the places we look at is the accounting firm’s client base. this is regularly where most accounting firm wealth management practices get their initial clients. it’s very important to realize that the current clientele is not the whole picture. with a high-end wealth management practice, accountants will regularly get more referrals to new high-quality clients. these will be wealth management clients but they will also be clients for other practice areas.”
by evaluating the wealth management potential within your accounting firm’s clientele, you can quickly approximate the probable revenues and costs over the next one to three years from a wealth management practice. by calculating these estimates, you can determine if it makes economic sense to establish a wealth management practice at your accounting firm.
another important consideration is having a wealth management practice that makes sense to the partners. to get the wealth management practice kick-started, the partners have to be willing to work with the wealth managers to identify opportunities. for many accounting firms, what is helpful is methodically going partner by partner and systematically identifying clients who would probably benefit from wealth management. in this way, new opportunities are consistently uncovered for wealth management as well as other practices at the accounting firm.
wealth management practices can – at the right accounting firms – significantly enhance the revenues and value of the firms. critically, they are a way to provide greater value to clients. however, establishing a wealth management practice and not taking the time to carefully decide if it makes sense at your accounting firm can be a major mistake.