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The Do’s and Don’ts of Partnering With CPAs

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What You Need to Know

  • Amid the pandemic and tax changes, it's more important than ever for advisors to partner with CPAs.
  • Forging a relationship with a CPA is not always simple.
  • Ed Slott, Jeffrey Levine and other experts have provided some best practices for advisors to follow.

It has always made sense for financial advisors to partner with certified public accountants to help clients.

But with the COVID-19 pandemic, the tax implications of relief packages and potential tax changes with the new presidential administration, it makes more sense than ever for advisors and CPAs to team up, according to experts in both fields interviewed by ThinkAdvisor.

They also provided some critical do’s and don’ts for advisors working with CPAs.

Why CPAs and FAs Should Be Partners

“The pandemic has led to unique planning opportunities that have both tax and financial planning applications,” according to Jeffrey Levine, chief planning officer at Buckingham Wealth Partners and a CPA. One example is the waiver of required minimum distributions in 2020 and the ability for individuals to roll back distributions previously taken to satisfy that requirement, he noted.

“Everyone is overwhelmed and stressed,” Levine said. “And those two things make it more likely for mistakes to occur. Working together, as a team, collectively for a client’s benefit, makes it less likely that such mistakes will occur.”

10 Tax Changes in New COVID Relief Package

While advisors should strive to become educated on tax issues, they don’t always know as much about tax law as a good accountant. Conversely, “CPAs tend to be history teachers: We tell you what already happened on a tax return,” Ed Slott, CEO and founder of Ed Slott and Co. and a CPA, pointed out.

“Right now, I would bring in attorneys, too,” to talk about estate planning with advisory clients, Slott said, noting the increased demand for estate planning due to the pandemic.

Recent legislation “added new opportunities that will only be available for a few years,” noted David Stolz, chair of the American Institute of CPAs’ Personal Financial Specialist Credential Committee.

For example, it is now possible to make a deductible charitable contribution for up to 100% of adjusted gross income, Stolz said. “Maybe the advisor would like to suggest a large Roth conversion, and the CPA could suggest a large charitable contribution from other funds to offset some of all of the income from the conversion,” he noted. “You need to communicate to take advantage of opportunities like this.”

Other Good Reasons to Team Up

“If advisors are looking to grow their practice and move up market and work with higher-net-worth and more complex clients, in our opinion, there’s no better way to do that than with partnering with a CPA because the CPA has access to those clients,” according to Andree Peterson, chief implementation officer at the financial planning firm Integrated Partners.

Meanwhile, “from a CPA perspective, especially with what happened last year, everybody’s looking for advice and CPAs are starting to recognize that they need to offer more advice and services within their practice,” she noted.

Another key reason for an CPA-FA partnership, according to Stolz: “The last thing an advisor wants is for their client’s CPA to tell them that your investments have caused a big tax bill. And the last thing a CPA wants” is to say “why didn’t you call me before you made this decision?”

Here are some best practices for advisors looking to partner with CPAs:

The Do’s

1. “Have — at a minimum — a working knowledge of the tax rules,” Levine said.

2. “Look for somebody [you] can connect with because you’re building a relationship with the CPA and it’s just like building a relationship with your client,” according to Peterson.

3. Make sure to “work with a CPA that is a good communicator, and also can discuss investment topics with a good level of understanding,” Stolz said.

4. “Start with the client’s tax returns,” Slott said. “Any good financial advisor is probably looking at their client’s tax return and on every tax return it has the name of the accountant.” You should contact that accountant and request a meeting to discuss the client and ask: “What can we do better?”

5. Say the “magic words” when you call your client’s CPA: ‘We have a mutual client.’”

6. Consider inviting a CPA to speak at a conference or seminar on a topic in which they are an expert. “CPAs love education. They love going to” continuing education seminars, where they can get free CE credits, Slott said. A lot of these are conducted online now, so you can invite CPAs from across the U.S., he noted, suggesting you hold such events regularly.

7. CPAs like it if an advisor shares resources and new info they learn that may be of interest to them. “They’ll remember you sent it to them,” Slott said.

8. Consider visiting CPAs’ offices around tax season and provide bags of goodies including food because it’s often hard for accountants to get away for lunch as the tax deadline approaches, Slott noted.

9. During tax season, CPAs often need info from advisors on certain investments in a limited amount of time. As an advisor, “the faster you can respond when they need you” the better, and CPAs will remember that, Slott said, noting: “Clients are always missing something and it’s usually some investment-related item that the financial advisor has access to.”

10. “Focus on providing the CPA value, not on getting referrals,” Levine noted. “If you do the former, the latter will happen naturally.”

11. Ask CPAs “how they would prefer to work with advisors, and if they haven’t/don’t ask why such partnerships haven’t materialized/worked out in the past,” Levine added.

The Don’ts

1. During tax season, if a CPA calls you and says he or she needs investment info for a mutual client, don’t wait a week or more to call back. By then, the CPA “could have done a hundred more returns [and may not] even remember what the question was,” Slott said.

2. Don’t invite a CPA to speak at a seminar who is “really a salesman in disguise,” Slott said.

3. Don’t do anything not mutually beneficial to you, the CPA and the client. “If it’s not good for everybody, it’s not good for anybody,” Slott said. “It has to be good for the accountant, for the advisor and most importantly the client.”

4. Avoid CPAs who are tough to work with. Don’t continue working with an accountant is if he or she “shoots down every good planning idea … As an advisor, you only want to work with accountants that are open to new planning ideas,” Slott said.

5. Don’t reach out to CPAs for the first time during tax season. “It’s just annoying” to try to make an appointment in March, Slott said. But Levine added: “For a lot of tax pros — especially those who cater to high-net-worth and/or high income clients who are more likely to have K-1s — the  periods of time leading up to the September 15 and October 15 extended filing deadlines can be just as busy. Other busier times can include the weeks leading up to quarterly estimates and around year-end.”

6. Don’t tell a client their CPA is wrong or otherwise disparage the CPA, Levine said. “Differences of opinion … are possible, but bad-mouthing the CPA to your client — and having it get back to the CPA — is a quick way to get on their persona non grata list.”

7.    Don’t expect an “instant flood of referrals,” Levine said.

8.    Don’t think that getting a CPA to partner with you will be an easy or quick process. “It takes time, but the rewards are well worth the effort,” Levine said. “Keep the door open long enough, and eventually you get the chance to walk through.”

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