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It wasn’t quite Woodstock three years ago at the American Institute of Certified Public Accountants’ 1999 Personal Financial Planning Technical Conference. But in terms of the turnout and level of enthusiasm, it might as well have been. “We had been expecting around 500 to show up, and we got close to 1,000 instead,” says Carol Bertolotti, project manager for conferences at the AICPA. “There was certainly a lot of interest.”

For this year’s PFP Tech Conference, to be held January 7-9 in Orlando, the AICPA has done a better job of bracing itself for the turnout of accountants who want the how-to on setting up and running a financial planning and investment advisory firm. Some 1,100 CPAs are expected to show up, but Bertolotti adds with a laugh that “the number coming has grown every year. So who knows?”

Indeed, interest among CPAs in planning and investment advice has been growing for some time. Ever since H.D. Vest set up shop in 1983, followed by the passing of the Uniform Accountancy Act by the AICPA and the state boards of accountancy a few years later, accountants have been moving into the planning arena. But 15 years since accountants began to be allowed to accept fees and commissions for investment advice, it’s still hard to get a handle on just how many CPAs have embraced these services. That debate–along with whether CPAs should offer such services at all, and how the ones who decided to do so are faring–is still raging.

It’s difficult to say how many CPAs have begun offering planning or investment services. Even the AICPA is in the dark, having just commissioned a study by Boston research and consulting firm Cerulli Associates to explore how many of their members are offering financial planning services and what they entail. That study, says Anat Kendal, the AICPA director of financial planning, will be out at the end of January. So for now, one can only guess at how deeply CPAs have plunged into planning.

Getting Into The Planning Biz

oCheck out the AICPA Web site (, and visit its resource centers on personal financial planning and investment advisory services.

oCall the PFP Section of the AICPA at 888-777-7077.

oConsider partnering with a broker/dealer, especially ones catering to CPAs, including Minneapolis-based Capital Professional Advisors ( or Irving, Texas-based H.D. Vest (

oSome custodians also have programs that will walk a CPA through the steps. DATAlynx (, the Denver-based custodial arm of First Trust, has a team of business development consultants offering advice to accountants.

oA number of consulting firms will advise a CPA and act as the back office once a planning practice is up and running. Firms include Buckingham Advisor Services in St. Louis at 800-711-2027, and First Global Inc. in Dallas, at 214-265-1201.

oAttend the PFP Tech Conference. Info is at

One clue: The AICPA has organized separate sections that members can join, such as tax planning, retirement planning, and personal financial planning, or PFP. Joining such sections entitles members to resources and discounts related to each area of interest. So far, 8,214 CPAs have moved to shell out the extra $100 a year it takes to become a member of the PFP section. But, Kendal concedes, “I don’t think that is an accurate indication of how many members actually do planning.”

Then there is the personal financial specialist (PFS) designation the AICPA offers. A member can attain it by meeting rigorous lifetime learning and experience qualifications, as well as taking a grueling, day-long test. Currently there are only 3,200 PFS designees, and the number is growing slowly. The mark was instituted in 1991; it was attained by 1,000 CPAs in 1995, and 2,500 in 1999, according to Kendal.

A Third Offer Advice of Some Sort

The best evidence comes from a study conducted in the spring of 2000 by the Taylor Research and Consulting Group of Portsmouth, New Hampshire. The survey showed that 34% of the AICPA members in public practice are currently offering investment advice. The AICPA, says spokesman Joel Allegretti, counts 38.9% of its membership–or about 130,704–as working in public practice. So that means that about 44,500 are offering investment advice.

But what, exactly, is “investment advice”? Allegretti says the Taylor study qualified it as “services that include current financial analysis, portfolio review, investment goal-setting and risk tolerance analysis, investment policy and asset allocation, investment vehicle selection, investment performance monitoring and reporting, and money manager selection.” However, the study did not quantify the commitment those 44,500 CPAs had made to offering such services, and Allegretti concedes that in order to be counted among that number, the CPA simply had to offer one of the services included in the definition of investment advice.

Anecdotal evidence provides another answer. The Web is full of lists of accounting firms featuring the services they provide. One such list found at the Open Directory Project Web site,, will give you a sense of how many CPA firms are actually involved in financial planning and investment advice. But only a small number appear to offer financial planning, and an even smaller number investment advice. There are roughly 53,000 independent accounting firms in the United States, according to the U.S. Census Bureau, and all in all, perhaps just 1 out of every 5 or 6 offer planning, and maybe 1 out of every 9 or 10 investment advice. “I would say that’s about right,” says Tony Batman, president and CEO of First Global, Inc., a consulting firm for CPA practices that would like to add investment advisory and financial planning services. “CPAs are a careful bunch and move slowly. I would say only about 3,000 firms across the country offer complete planning and implementation now. But that will change soon.”

Although entering a new field entails some risks, there is a strong impetus for an accountant to take the plunge. For one thing, accountants have fostered an incredible reputation among consumers. While Wall Street firms have damned themselves over the years with stock picks that didn’t work out, CPAs have come to mean nothing but honesty and objectivity. In 1998, the AICPA commissioned a study by Hill Holiday Agency that surveyed 1,000 business executives across the country. Forty-seven percent named the CPA as the professional most known for “honesty, objectivity, and integrity.” Forty-six percent named the CPA as “the most trusted business advisor,” and 43% said the CPA “can be counted on for the best advice on business and financial planning.”

Eager Clients?

This reputation has created a great public demand for accountants’ investment services. One study, conducted in 2000 by Minneapolis-based broker-dealer Capital Professional Advisors, surveyed 1,521 individuals with an annual income of $75,000 or more, and 719 small business owners whose business generates $10 million or more in annual revenue. The study showed that only 9.1% of individuals and 8.8% of business owners had obtained financial products from their accountants. However, among those who hadn’t, 50.9% would be “very interested” in doing so, and 74.6% would be “very interested” in obtaining insurance products from their accountants.

A second great advantage is the existing business a CPA has from tax clients. By most accounts, a single CPA handles between 100 and 200 clients with 1040 returns per year. “I already have a relationship with those people,” says Frank Stearns, a CPA and single practitioner in Riverside, California. “They know me and have tremendous confidence in me.” Stearns, 50, says that he has toyed with the idea of adding advisory services, but has refrained, instead continuing to refer some 40 to 50 clients each year to full-service brokers. “I send them to PaineWebber or Merrill Lynch,” he says. Colin Cooper, another single practitioner CPA in nearby Tustin, California, says he doesn’t offer financial planning or investment advice, and thus refers five or six clients per year to estate attorneys and brokers.

But what if the CPA were to keep those clients in-house, and even begin making overtures to existing tax clients who have not inquired about investment advisory and financial planning services? Sherman Doll, of the Walnut Creek, California CPA firm Thomas, Doll & Company asked that question of himself and his partners following the changes that allowed CPAs to offer investment advice. “We would do the financial plan, but then hand it off to someone else to implement it,” he says. “The most lucrative part is the implementation. It represents recurring revenues, and once you do the models, you can apply them to a number of portfolios at once.” So in May, 1999, he and his partners established Capital Performance Advisors, LLC. Over the CPA firm’s 35 years of existence, Doll says 800 tax clients had been amassed. Of that, 150 invested with the firm during the its first two years of existence. The firm now has $100 million under management. “My personal earnings have gone up 30%,” Doll says.

“It Will Take Work”

Not every story is as glowing. Tim McCain, business development consultant with Denver, Colorado, custodian DATAlynx, has been helping CPAs add investment services for the past 24 months. Over this time, he says that he has worked with close to 20 CPA firms, eight or nine of which have actually added the services. “These are smaller shops with one to four partners,” he notes. “The largest was doing 800 tax returns a year, but most were in the 100-150 range.” Of the eight or nine that followed through, McCain says that most have amassed about $1 million during their first year, and that the largest has $5 million. “No, I don’t think it’s easy to get your tax clients on board,” he says. “It will take work.”

And whether the CPA achieves success is only one of the questions that must be asked. A CPA must also consider what tests to take to become licensed. What partners will become licensed? Is it better to start the business individually or to partner with a broker/dealer? What custodian should be used and what are the relative merits of each? How much time does it take to acquire the necessary expertise, and what investment philosophy should the CPA adopt? While these are major questions, many CPAs consider them to be no more than growing pains. One thing, however, is certain: For many CPA firms, doing the client’s books is inevitably going to include much more than just filling out 1040s.


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