Main Menu

Tax to Financial Planning: A Natural Progression


Heilich_DaveA change in regulations and client demand has increased opportunities for CPAs to expand their financial planning role. Some CPAs have added certifications to offer clients comprehensive investment and tax advice, while other CPAs prefer an independent approach where they provide objective high level advice and team up with the appropriate investment specialists to take care of client needs.

Roger Russell of Accounting Today interviewed Dave Heilich, principal, tax services for Brown Smith Wallace, to get his perspective on the value of the independent approach. The article below was originally published by Accounting Today on November 1, 2011.

Most accountants involved in tax preparation are already involved in financial planning, even though they might not realize it.

"By virtue of doing tax preparations and giving tax planning advice, they're already doing a component of financial planning," said CPA Barry Picker. A member of the New York State Society of CPAs' Personal Financial Planning Committee, Picker said that since most CPAs are already in some part of financial planning, "It becomes a question of how much do they want to extend that. They can become [registered investment advisors], get their insurance license, or some sort of securities license, depending on what they want to do. Being a CPA is a good start, but the individual has to want to go in that direction."

Picker has both the Certified Financial Planner and the Personal Financial Specialist designations. He has a limited liability company that is an RIA, but doesn't do any selling. "From the public perception, it's better being 'fee-only' - if you don't sell anything, you have no axe to grind," he said.

For Wayne Pahssen, regional managing principal at Michigan-based CPA firm Rehmann, getting into financial planning evolved naturally from his work with owners of closely held businesses. "Every time we had meetings, not only were they interested in accounting and tax planning, but they also asked questions bordering on their personal financial picture, so I pursued both [the PFS and CFP] designations," he said.

"I started using tax information to help my clients develop plans for their future back in the 1980s," he said. "At that time, the law generally precluded us from being involved in active management of a portfolio and lending advice on specific types of investments, so I would help clients with the planning areas. The law changed in 1997, and now CPAs can be involved in the direct management of investments for clients."

Pahssen also works on a fee-only basis. "We have an agreed-upon fee as a percentage of assets under management, so that the compensation and fee structure will be transparent for clients," he said. "We try to provide a holistic approach to investment management. We include tax planning, retirement planning, estate planning, education planning, and reviewing of insurance and risk-management concerns."

"If other professionals - attorneys, insurance professionals, brokers, etc. - are needed, we bring them into the office, but we remain the quarterback in the process," said Pahssen.

"Most CPAs have reservations about getting involved in investing their clients' funds," he opined. "They're concerned that if their clients lose money, it may risk the relationship. But if they have the appropriate training and skill set, and use accepted investment principles, client portfolios should perform in the same direction that investment markets are going. ... The CPA knows how all the pieces fit together."


One of the mistakes that CPAs make when becoming involved in financial planning springs from their focus on billable hours, according to Glen Coral, director of advanced planning at the Philadelphia office of national firm CBIZ: "What they need to do is expand their horizon, and open their eyes to the possibility of financial planning. They can work with clients on long-term goals and help their clients better position themselves to take on the risks we've run up against in the last few years."

In place of being risk-averse, they should be thinking along the lines of involving other qualified professionals to put together a solid plan for their clients, he indicated: "They can expand their services to work closely with investment and insurance professionals to meet their goals. Accountants and clients tend to be more short-term-oriented, while financial planning, insurance or investment professionals tend to be long-term-oriented. It makes for good collaboration, but it only works when both sides respect each other's perspective and the value each brings."

"CPAs were doing financial planning before financial planning was a profession unto itself," explained Marc Minker, who leads the Individual Wealth Planning Group at CBIZ. "CPAs have an incredible insight into what the client has been involved in. ... As they go through the tax process, that ultimately leads to a discussion of financial planning."


There are multiple examples of things practitioners should be looking for in ways to reduce a client's tax liability, which is a natural lead-in to talk about financial planning, Minker noted. "All of these are part of financial planning exercises, and who better to work through these and know the clients' lives inside and out than the CPA?"

While Minker acknowledged that there are some CPAs who are good at managing a client's portfolio, he prefers the team approach. "I don't know whether to buy or sell Amazon or Apple, but I do know that if my client accumulates enough assets to generate a sufficient cash flow off that base, I've done my job," he said. "We try to match the client with the outside investment advisor that will best synchronize with the needs of the client."

Dave Heilich, practice leader of the Family Wealth Planning Group at St. Louis, Mo.-based Brown Smith Wallace, also believes in the team approach to financial planning. "We don't want to put another hat on the accountant and say 'You're doing financial planning," he said. "We have a number of outside independent professionals that we make part of the team. Are we leaving money on the table? No doubt, but we get more back in terms of client relationships."

"We try to work with people who are willing to be a part of the team, and who don't insist on driving the process," he said. "Just because we're not picking stocks or advising on asset allocation, it's important to understand what a client's cash flow needs are, and how it interrelates with everyone working together."


Back to Page