Attention CPA’s & Accountants:
Is offering
investment
advisory
services to
your clients
a good
YOU as Outsourced Registered
Asset
Investment
CPA &
Advisor Management Advisory
Firm
Services
strategy
for
growing
your
practice?
Archer Investment Corporation | 9000 Keystone Crossing, Ste 630 | Indianapolis, IN 46240
317-581-1776 | 317-581-1812 fax | www.archerinvestment.com
Offering Investment Advisory Services to Your Clients - a Good Strategy for Practice Growth
A Proven and Financially Rewarding Path to Practice Growth.
One trend quickly spreading across the accounting industry today is more and more CPAs and
accountants are offering investment advisory services to their clients in addition to accounting,
bookkeeping and tax preparation.
In general, it makes sense to be as knowledgeable and helpful with your client's complete financial
picture as possible, but how can you do this without spreading yourself too thin?
When your clients have inquired about investing in the past, I'm sure you've considered how nice it
would be for them to be able to work with you on these matters and keep more of their financial
affairs under one roof.
The alternative is to refer them to a broker down the road who may or may not have their best
interests in mind. We have all seen our clients buy an annuity or whole-life policy (their own
retirement plan) that was "oversold".
Are You Really The Best Option For Your Clients?
You'll find many times the answer is yes.
The obvious question remains, what is required to offer investment advisory services?
Is my CPA practice going to get the attention it demands while offering this high-level service?
The answer is straight-forward and simple. First, offering investment advisory services the right
way requires significantly less time than many realize.
A great article in the Journal of Accountancy in 2012 explained how the most successful CPA
practitioners outsourced the asset management to a Registered Investment Advisory firm.
This allowed them to continue to focus on their practice without having the headaches of handling
the back office compliance, portfolio creation, paperwork, billing, etc. This system allows you to
increase your "passive" revenues instead of sending them out the door, and most importantly
further assists your clients with their financial well being.
The Road Most Traveled...
The most common avenues to becoming a licensed Financial Advisor are testing for and passing
either the Series 7 and Series 66 exams, OR the Series 65 exam.
The biggest difference between taking the Series 7 & 66 exams or the Series 65 is how you will be
allowed to charge the client for your service.
Passing the Series 7 & 66 will allow you to either charge the client an advisory fee or to collect
commissions on products you sell.
With only the Series 65 license, you are still able to charge an advisory fee.
The Move Towards Fee Based Relationships.
Over the past 5-10 years the entire financial services industry has been moving towards fee based
client/advisor relationships with the advisor commonly charging the client an annual fee between
.75% and 1.50% of the account value. This fee is usually divided into four quarterly payments.
Archer Investment Corporation | 9000 Keystone Crossing, Ste 630 | Indianapolis, IN 46240
317-581-1776 | 317-581-1812 fax | www.archerinvestment.com
Offering Investment Advisory Services to Your Clients - a Good Strategy for Practice Growth
These fee based accounts can also be referred to as "wrap" accounts. Charging the client an
advisory fee as opposed to collecting commissions aligns the advisor with the client's best interests
and also coincides with how a CPA bills clients on an ongoing basis.
The advantages to offering investment advisory services as a CPA are plentiful. Along with the
peace of mind gained by knowing that YOU have your client's best interests in mind, and the
convenience of them keeping their affairs under one roof, there is the additional revenue that your
practice will create when offering this service to your clients.
What Assets Under Management Can You Expect To Attract?
A CPA who offers investment advisory services manages an average of $8 million in client assets.
When working at your typical "broker", a book of business this size is probably not enough to keep
a safe position with the company, but for the CPA who simply keeps an eye out for the right
opportunities without taking focus away from the accounting practice, it can be a great source of
additional recurring revenues for the limited amount of time invested.
Payouts across the industry range from 40% - 97%, typically falling around 70%. What this means,
is that a CPA managing $8 million in assets and charging a 1% advisory fee will collect fees of
$80,000. These fees paid to them from their Broker Dealer or Registered Investment Advisor at 70%
will add $56,000 in recurring revenues to the practice.
The Future of Your Clients Investments Effecting Taxes Helps You.
Why would a potential client invest with their CPA over a broker down the road? Who better for a
client to invest with than an expert on how their investments will affect their taxes.
This will become even more common with pending changes to the tax code in 2013. Of course
some clients/prospects will already have solid relationships built with a trusted advisor, but many
won't.
In fact, most of the larger brokerage firms do not pay their advisors on clients who have less
than $250,000, and this number keeps rising over the years.
These "low level" clients who currently lack service are great clients to the CPA and offering
investment advisory services will continue to enhance the relationship as they will usually grow
larger than $250k over the years.
The tax clients who will become investment clients will join you because of the level of trust you've
previously established, or because they are not getting good service from their current advisor.
On average, approximately 30% of your tax clients will become investment clients. H&R Block
when they offered commissionable products enjoyed a near 20% penetration rate amongst their
clientele.
How Do You Begin? Take The First Step...
The first step is selecting a Registered Investment Advisor (RIA) or Broker Dealer to affiliate with.
Archer Investment Corporation is an RIA that offers many competitive advantages to our advisors.
Archer Investment Corporation | 9000 Keystone Crossing, Ste 630 | Indianapolis, IN 46240
317-581-1776 | 317-581-1812 fax | www.archerinvestment.com
Offering Investment Advisory Services to Your Clients - a Good Strategy for Practice Growth
After Troy Patton, CPA sold his $6.7 Million CPA firm (Half of the revenues were from financial
services) he founded Archer Investment Corporation in 2005.
Every step taken by Troy in establishing the company was taken with the CPA in mind. He created
a business model that allows a CPA to grow their revenues by adding investment options to the list
of services they provide without losing focus on their accounting practice.
These advantages include back office support that relieves the CPA of paperwork headaches. John
Rosebrough, CFA creates model portfolios with a focus on performance and proper diversification
while maintaining a low cost to the client. The client's chosen portfolio is based on their risk
tolerance.
Having these portfolios in place saves the CPA the time it takes to research the investments and
place the trades themselves.
Since some of Archer's advisors are relatively new to investment advisory services, Archer Portfolio
Manager Steve Demas works to provide them with sales and marketing ideas. Steve has
experience building a book of business from zero to $110 million and is passionate about helping
our advisors reach their goals as well.
Archer Investment
Corporation being an
RIA means that when
affiliating with Archer,
you would only be
required to take and
pass the Series 65
exam, not both the
Series 7 & 66 exams
that would be
required if you were
affiliating with a
Broker Dealer.
Being an advisor of an
RIA, you can open
virtually any account
your client may need,
these include IRAs,
SEPs, Simple IRAs, and
even 401Ks. These
accounts can hold stocks, bonds, mutual funds, and ETFs among other investment vehicles as your
options are not restricted. Compared to other RIAs, Archer also offers a higher payout of 80% 97%.
To take the next step and add this valuable service to your practice, please contact Brian Couzens,
Archer Investment Corporation Vice President of Client Development at (317) 581-1776.
Archer Investment Corporation
• Troy C. Patton, CPA/ABV - Fund Manager
• Steven C. Demas - Portfolio Manager
• John W. Rosebrough, CFA - Portfolio Manager
Archer Investment Corporation | 9000 Keystone Crossing, Ste 630 | Indianapolis, IN 46240
317-581-1776 | 317-581-1812 fax | www.archerinvestment.com