PART 1 Sustainable Business Development for CPAs: Integrating Comprehensive Wealth Management - PowerPoint Presentation

PART 1Sustainable Business Development for CPAs:Integrating Comprehensive Wealth Management Services Insert Firm Name and Program Name WelcomeThe SustainableBusiness Series- CPAs

[Insert your background, your credentials - list 3 or four items about yourself][insert picture of you or the speaker][insert speaker name or advisor name]Integrating Comprehensive Wealth Management Services TODAY’S SPEAKER

“INTEGRATING WEALTH MANAGEMENT SERVICES INTO YOUR PRACTICE”Presented by[insert speaker name or advisor name]

OPENING COMMENTS & INTRODUCTIONSPresenter’s BackgroundAttending CPAs and AccountantsSelf IntroductionPractice OverviewWhy Are You Here Interesting/Informative/Interactive!

PRESENTATION TOPICSAn Evolution: From Accountants to Wealth ManagersWhat Your Clients are Looking ForWhy Add Wealth Management Services to Your PracticePlayers in the MarketplaceMethods of Wealth Management Integration Business Structure & Compensation IssuesPartnering – Collaboration is always best for the clientCo-sourcing: [insert program name] Roadmap to Success and Next Steps

INDUSTRY PERCEPTIONCPAs are beginning to play a major role in the delivery of Wealth Management Services.Source: AICPA, CEG, Industry Consultants, 2002

FUTURE PREDICTIONSCPAs and Accountants will dominate the Wealth Management Services Industry.Source: AICPA, CEG, Industry Consultants, 2002

INDUSTRY EXPERTSCPAs and Accountants will be the Preferred Primary Advisors/Wealth Managers.Source: AICPA/SS/BOA • CEG Worldwide • Nisberg & Associates • Financial Planning Magazines/Publications, 2002

CPAs HAVE ARRIVED!The AICPA continually reports that many of their members have positioned their practices to provide comprehensive wealth management services.Source: American Institute of Certified Public Accountants (AICPA, 2002)

CPAs ARE HERE TO STAY49 of the 50 states allow CPAs to accept commissions and fees*AICPA PFS (Personal Financial Specialist) designation on the riseCPAs are aggressively pursuing the CFP[insert register mark] designation (highest average score and pass rate)AICPA has created and will continue to create Educational resources for Financial /Wealth Management Services (www.aicpa.org) *CPAs have to be appropriately securities registered in each state, and potentially advisor registered depending upon the state. (AICPA, 2010)

AN EVOLUTION FROM ACCOUNTANTS TO WEALTH MANAGERSStage I – The Traditional AccountantStage II – The Accountant as Financial AdvisorStage III – The Accountant as Wealth Manager“Expanding Beyond Tax, Accounting, and the Attest Function.” Source: Spectrem Group, 2009

A CPA BASED WEALTH MANAGERSource: Spectrem Group CPATODAY Tax Preparation,Tax Planning, and Advice CPA TOMORROW Tax Preparation, Tax Planning, and Advice PLUS Financial Services, Insurance, and Estate Planning CPA BECOMING THE PRIMARY ADVISOR Providing Clients with Fully Integrated Advice and Counsel Ranging from Taxes to Financial Services to Comprehensive Wealth Management

WHAT YOUR CLIENTS ARE LOOKING FOR . . .Proactive financial planning and comprehensive wealth managementConvenience of “one-stop shopping”Desire for “Total Financial Life” guidance rather than individual product salesThe team approach – Collaboration is always better for the client! “Individuals/Families/Business Owners”

Source: Spectrem GroupTODAY’S CLIENTS EXPECT MOREModel of the Future of Wealth ManagementCLIENTS Alternative Investments Tax Preparation& Planning Investment Management Banking Services Trust & Estate Planning Risk Management And Insurance Financial Planning Hedge Funds Private Equity Venture Capital Credit Cash Management Checking Mortgages Property & Casualty Life Insurance Annuities Minimizing Capital Gains Stock Option Exercise Low Basis Equity Diversification Estate Plan Development Trust and will Preparation Fiduciary Management Asset Allocation Liquidity Needs Risk Management Retirement Planning Separate Accounts Mutual Funds Real Estate Investments

THE WEALTH MANAGEMENT CYCLESource: Spectrem Group WealthBuild WealthManageme nt Wealth Maintenance Wealth Transfer Alternative products to traditional deposits (MF, Annuities, Stocks) Debt reduction Insurance Retirement savings College savings Portfolio approach to holdings Align risk/return strategies Insurance Preservation of principal Growth/income tradeoffs Insurance Retirement savings Retirement savings College savings Estate planning Planned spending Insurance Long-Term Care Customer Financial Lifecycle Net Worth

WHY CPAs ARE ENTERING THE FINANCIAL SERVICES BUSINESSBetter Satisfy and Serve ClientsIncreased Revenue OpportunitiesCompetitive PressuresTo Grow and Expand Their BusinessCreating a more profitable exit strategy Changes in the Rules and RegulationsClient Retention!

SURVEYING CPA CLIENTS(EXISTING)INTENDED ACTIONS (Andersen/Enron)72.5% would add assets for their accountant to manage63.2% would refer other people to their accountant for investment servicesOnly 5.3% were moving assets away from their accountantOnly 2.3% were switching from an accountant to an investment advisor Source: Accountant as Wealth Managers, 2005

SURVEYING CPAs THAT CURRENTLY OFFER FINANCIAL SERVICESWHAT IT TAKES TO BUILD A SUCCESSFUL WEALTH MANAGEMENT PRACTICE89.4% Having partners identify prospects for the financial services practice74.8% Creating strategic alliances with experts in wealth management services70.5% Being able to access industry professionals on a case-by-case basis69.8% Developing a detailed business plan for the financial service practice67.2% Having a compensation system that promoted cross-selling of financial services 67.0% Committing the resources to the financial services practice63.8% Having all partners committed to the financial services strategy54.0% Developing a detailed marketing plan for the financial services practice 44.9% Having the infrastructure and support in place to do the business 44.1% Refining the way the financial services practice operates38.8% Asking clients for the new life insurance or investment business28.6% Having one partner in charge of the financial services practice Source: Accountant as Wealth Managers, 2005

REASONS FOR LEAVING THE FINANCIAL SERVICES BUSINESS85.9% The firm never fully committed to the business71.0% The firm did not have the requisite experience67.2% The firm never moved beyond the “Low Hanging Fruit”58.6% Clients were not asked for their financial services business49.1% Partners were not fairly compensated for providing clients33.4% There was a conflict with the way the financial services providers did business9.6% The firm lost accounting referral sources Source: Accountant as Wealth Managers, 2005 SURVEYING CPAs THAT OFFERED FINANCIAL SERVICES

SURVEYING CPAsTHAT ARE THINKING ABOUT ITWHAT’S HOLDING THEM BACK (TESD)67.6% Learning how all the products work57.8% No one in the firm has taken “ownership” of the financial services practice48.0% Finding the best financial advisor to team up with18.6% Becoming adept at the various types of planning Source: Accountant as Wealth Managers, 2005

CPAs: THE BEST POSITIONED ADVISORHave established trust with wealthy clientsInfluence over ½ of country’s net worthAppealing characteristics:Conservative, trustworthy, objective, independent, detailed-orientedKnowledgeable about taxes and good with numbers Clients are comfortable receiving investment advice from CPA’s firm – “The #1 primary advisor”Ability to offer one-stop shopping (UAA - Uniform Accountancy Act)

INDUSTRY INFORMATIONAccounting Governing BodiesAICPA NASBAState SocietiesState Board of Accountancies Understanding the Issues Uniform Accountancy Act (UAA)Attest Function (Audit, Review, Compilation) AICPA’s Professional Code of Ethics Industry Publications Accounting Today Electronic Accountant CPA Financial Services Advisor Financial Planning Investment Advisor Registered Representative

PLAYERS IN THE MARKETPLACEWho Wants to Work With CPAs and Accountants?

MAJOR PLAYERS IN THE MARKETPLACERegistered Investment Advisors (RIAs)Mutual Fund CompaniesMajor WirehousesClearing and Custodial FirmsInsurance CompaniesConsolidators Specialized Broker/Dealers

REGISTERED INVESMENT ADVISORSMoney management firms offering Turn-Key Asset Management Programs to CPA firms (TAMPs)Emphasize access to mutual funds, model portfolios and private money management, while charging a “wrap” fee against assets under management Buckingham Asset ManagementSEILockwood Financial The H Group FocusPointSolutionsSymmetry Partners Curian Capital

MUTUAL FUND COMPANIESThese companies have built dedicated platforms to support CPA marketplaceFund companies typically distribute through a third-party broker-dealerSome have aligned with companies dedicated to targeting CPAs CIBC Oppenheimer Vanguard Fidelity American Funds

Major WirehousesMajor wirehouses offer CPAs access to products via solicitor’s agreementsCPAs also have access to individual stockbroker for traditional referralsWirehouses can capitalize on branding and name recognition Merrill Lynch (B of A)Morgan Stanley Smith Barney UBS Paine Webber

CLEARING AND CUSTODIAL FIRMSOffer services and support to independent investment advisorsMany CPAs consider becoming Registered Investment Advisor (RIA) as best way to offer management services Access to mutual fundsActively solicit CPA/RIA business Merely repackaging their existing retail RIA program for the accounting profession Schwab Advisor Services Pershing Advisor Solutions TD Ameritrade Fidelity Institutional Wealth Services

INSURANCE COMPANIESMajor life insurance companies developing marketing efforts to CPAs and professional advisorsIndependent producer groups attract those firms having a strong focus in advanced marketsEstate planningDeferred compensation models AXA/Equitable MONY GroupLincoln Financial Jefferson PilotJohn Hancock Nationwide NEF/Met Life New York Life The Principal Prudential Jackson National

CONSOLIDATORSAccounting profession has attracted attention of well-financed consolidatorsTypical business model: CPA firm acquired for full integration within large financial services conglomerateAlternative business model: Acquiring firm provides back-office while CPA firm maintains local identity American Express-Tax and Business Services Century Business Services HRB Business Services (H&R Block)

SPECIALIZED BROKER/DEALERSOffer diverse products and clearing services to CPA firmsSupport available for registered representatives: training, licensing, assistance, software, marketing materials, and phone consultationMost have established an RIA to offer wrap-fee products Most have established an insurance capability HD Vest 1 st Global Terra Financial Money Concepts

MODEL OPTIONSWhere Does the CPA Turn?

METHODS OF INTEGRATING FINANCIAL SERVICESTraditional referrals to financial services providersOUT-SOURCE 1 Develop internal / in-house infrastructure and expertise to deliver services IN-SOURCE 2 Form strategic partnership/alliance with service provider CO-SOURCE 3

METHODS OF INTEGRATING FINANCIAL SERVICESTraditional referrals to financial services providersOUT-SOURCE 1 AdvantagesAbility to offer services at little or no cost Access to financial services specialistsLimited malpractice liability Disadvantages Loss of client control May not be able to give substantial input on financial services No compensation to firm “Client Retention”

METHODS OF INTEGRATING FINANCIAL SERVICESDevelop internal/in-house infrastructure and expertise to deliver servicesIN-SOURCE 2 AdvantagesControl of services and advice provided Ability for firm to offer wide range of services and product portfoliosAbility to understand client even more Potential revenue opportunities Disadvantages Start-up costs are major resource commitment Huge administrative expenses in establishing and maintaining a broker/dealer Bear full risk/responsibility in business not expert in Substantial time commitment in initial training, ongoing education and compliance management Lack of size may limit ability to form selling agreements with insurance/investment product providers (compromising independence and objectivity)

METHODS OF INTEGRATING FINANCIAL SERVICESForm strategic partnership/alliance with service providerCO-SOURCE 3 AdvantagesAbility to offer services and products with little resource requirement Ability to utilize resources for other strategic objectivesAbility to offer a fuller product portfolio Access to planning and case design Potential revenue opportunities No loss of client control Ability to attract clients with additional services Disadvantages Company aligned with may have limited products/services Professional assigned to firm may not “get along” with the CPAs Perceived loss of independence and objectivity

OUT-SOURCINGTRADITIONAL REFERRALS TO FINANCIAL SERVICE PROVIDERS (sometimes for a fee) Merrill Lynch (Bank of America) Morgan Stanley Smith Barney UBS Paine Webber Legg Mason

IN-SOURCINGDEVELOP INTERNAL/IN-HOUSE INFRASTRUCTURE AND EXPERTISE TO DELIVER SERVICESBuckingham Asset ManagementThe Advisors GroupFinancial NetworkLockwood Financial Services CIBC OppenheimerSEI InvestmentsFrank Russell Investment Management Vanguard Group

IN-SOURCINGDEVELOP INTERNAL/IN-HOUSE INFRASTRUCTURE AND EXPERTISE TO DELIVER SERVICES Schwab Advisor Services Fidelity Institutional Wealth Services Pershing Advisor Solutions TD Ameritrade 1st Global H.D. Vest Terra Financial Money Concepts

CO-SOURCINGFORM STRATEGIC PARTNERSHIP/ ALLIANCE WITH A SERVICE PROVIDER Nobile Wealth Management [insert firm name][insert program name] Securities America (CPA Partners) Beneficial Financial Group (CPA Plus) 1717 Capital Management Group (SAA) 1st Global (BMS) American Express (Alliances) AXA/Equitable (PAG) MONY (Trusted Advisors)

BUSINESS STRUCTURE FORMATIONShould CPAs Create a Separate Entity?

LLC OR CORPORATION?Legal separation between CPA practice and wealth management services businessClarity to clientsThe different hats that you are wearingServices you are providingHow you will be compensated Better adherence to ethical principles of independence and objectivity outlined by AICPAStand-alone entity more easily accommodates exit strategy

REVENUE FLOW AND COST SHARINGCan Licensed and Non-Licensed Partners Share in the Compensation?

REVENUE FLOW AND COST SHARINGHave all partners get licensedLLC register and start an Insurance Agency and become a Registered Representative/Investment Advisor Representative of a broker/dealerSet up a cost sharing/billing arrangement between CPA firm, financial services LLC or the Financial AdvisorSolicitors agreement

CPAs MUST DO SOMETHINGOut-Source?In-Source?Co-Source?Do Nothing?

THE CHARGING ELEPHANT REPRESENTS . . .Your clients and their demands for value-added services (high expectations of you being viewed as the financial “quarterback”)Your competition infringement (i.e. American Express, HRB Services, Other CPA firms etc.)Financial services; technical skills, academic excellence and practical experience (lack thereof in the financial services business)Marketing strategies and implementation (lack thereof in the financial services business)

THE CASE FOR FORMING STRATEGIC PARTNERSHIPSThe client loves the “Team” approachCollaboration creates better resultsClient desire for one-stop shoppingBetter serve the under-servedCreate more value in your firm A powerful wealth manager (CPAdvisor)

CPAs BASIC VALUE PROPOSITIONSEstablished trust with wealthy clientsInfluence over ½ of country’s net worthAppealing characteristics:Conservative, trustworthy, objective, independentKnowledgeable about taxes and good with numbers Clients are comfortable receiving investment advice from their CPA firm – “The #1 primary advisor”Ability to offer one-stop shopping

Technical skills and expertiseMarketing strategies and business development techniquesDemonstrated successes in delivering wealth management servicesService-based mentalityAbility to implement financial solutionsFinancial Service Professional’s BASIC VALUE PROPOSITIONS

PARTNERING – THE MODEL OF THE FUTURE Legal Services Investment Management Charitable Giving Insurance Estate Planning Wealth Manager CPA Tax Preparation Tax Planning Financial Planning

WHAT TO LOOK FOR IN A PARTNERForm over SubstanceSubstance over Form Substance and Form

SUBSTANCE AND FORMDedicated Team of Professionals Focused on Helping CPAs Incorporate Financial Planning and Wealth Management Services into Their Practice.SupervisionTrainingMarketing Financial PlanningPractice ManagementTechnology Local RegionalNational }

FIRM’S SELECTION CRITERIAIndependence and ObjectivityPlanning ProcessTechnologyProduct Network Access to ExpertiseMarketing and planning support and consultation Advanced market specialists RegulatoryEnvironment AICPA, BOA, FINRA, SEC and Insurance Corporate Structure & Support Technical and Concept Training How to conduct business Planning and process analysis Products and services Licensing and Registration Getting started licensing kit Self study, seminars Securities and Insurance (credentialing) Compensation Options Fee-based planning Commission based Asset management fees

EXPANDED SERVICESPosition Your Firm to Deliver on the Promise: Financial Planning Professional money management Mutual Funds / ETFs / REITs Annuities Life Insurance Stocks and Bonds Alternative Investments

MARKET POSITIONAsset Managers InsuranceCompanies Your Logo Here Wirehouses Specialized B/D’s Consolidators Diverse Limited Distant Local Service & Support Product Options Clearing and Custodial Firms

NASBA APPROVED CASE STUDY:[insert program name]-ALLIANCES DONE THE RIGHT WAY

Who we are . . .What we do . . .How we do it . . .Why CPAs utilize our model (P/P/P) (proven, practical, profitable)MEET THE PLAYERS & LEARN MORE

INTRO TO [insert firm name][Insert Advisor Name][Insert Advisor Title][Insert Your Picture]List several bullets describing you and your firm Securities, advisory services and certain insurance products offered through INVEST Financial Corporation, member FINRA/SIPC and affiliated insurance agencies. INVEST is not affiliated with CPA2 or Nobile Wealth Management.

[Insert broker/dealer name] AT A GLANCEList 5 or 6 items about your broker/dealer

WHAT [insert program name] DOES. . .Show you how to integrate financial planning and wealth management services into a CPA’s practiceShow you how to increase a CPA’s revenue potential and maintain their clients’ satisfactionShow you how to Successfully add Financial and wealth management Services without Materially Disrupting your CPA Practice

HOW IT’S DONECPA ProfileClient SegmentationMarketing ProgramInitial PlanAction Plan Financial Services IntegrationOffice Setup Financial Planning DayChecks and Balances Practice Profile Client Segmentation Checks and Balances Marketing Program Financial Services Integration

PRACTICE PROFILEGoals:Gather facts about the practiceTarget successful practicesDetermine if the relationship will be mutually beneficialIdentifies core disciplinesAICPA self assessment Assist with development of specific marketing plan

CLIENT SEGMENTATIONGoals:Understand CPA’s clients’ needsFocus marketing efforts into specific action stepsSegment clients by A, B, and C classesIdentify customer groups with common: ProfessionsDemographicsAssociations or interests

MARKETING PROGRAMGoals:Who – Targets customer groupsWhat – Identifies key messages and product and services being delivered to clientsHow – specifies marketing strategies and techniques for meeting goalsIncludes agreed upon goals

OFFICE SET-UPGoals:Solidifies the process for the CPAIdentifies roles and responsibilitiesIntroduces specific marketing planBegins compliance management and separation of business Held in CPA’s officeThe firm’s only appointment for that day

FINANCIAL PLANNING DAYPro-active approach versus reactiveSystematic way to integrate wealth management servicesCPA maintains control of client relationshipScheduled on-site 1 day a week at CPA’s officeWealth Manager supports CPA locally in conducting business

CHECKS AND BALANCESQuarterly Roundtable MeetingsSetting Goals and Monitoring Results 180 Day ReviewPractice Management Workshops

THE ESSENCE OF THE [insert program name] APPROACH Local, hands-on, business partnershipLocal execution and implementationWealth management division-variable comp modelLeverage each other’s skills, talents, and expertise to collectively provide value-added client services To the extent possible, all business is conducted in CPA office (Financial Planning Day/Office Set-up)CPA Firm Partner (s) Securities Registered Life and Health LicensedInvestment Advisors or Investment Advisor Reps Local Office (NWM) Securities Registered Life and Health Licensed Investment Advisors or Investment Advisor Reps * Proven Practical Profitable ( 20 years and running!)

THE PROCESS & RELATED TIMELINEMonths 2 & 3Month 4 CPA Commits to Financial Services Financial Services Delivery to Clients Initial presentation Practice Profile Letter of Intent Deliver Licensing Kit Begin Financial Planning Days Marketing Activities Client Appointments Client Implementation Licensing Process: Schedule Exams Study for Exams Sit for Exams Deliver Referral Rep Agreement LLC set up Market Planning Client Profile Office Set up & Training Month 1

BUSINESS PLAN “SWOT”ANALYSISStrengthsWeaknessesOpportunitiesThreats

STRENGTHSKEY QUESTIONSWhat are the strengths of your firm?What are your capabilities?To what do you attribute your firm’s success today?

WEAKNESSESKEY QUESTIONSWhat are your weak points?What key things is the firm lacking?If you’ve lost clients, why have they left?

OPPORTUNITIESKEY QUESTIONSSpecifically, where are the new opportunities for growth in your market?Where are the opportunities that exist in your current client base?

THREATSKEY QUESTIONSWho or what are your competitors?What services do they offer?How much of a threat is the Internet?Is there competition from other non-traditional sources?

THE OPPORTUNITY IS NOW!Maturing marketplaceAggressive competitive environmentCPAs will become a major player in the financial services industry (90/10 survey)Your clients have been waiting . . . how long will they wait until they go elsewhere?

TRADITIONAL FIRM VS. VISIONARY FIRMWhat’s the difference between a CPA firm that offers wealth management services and one that does not?

TRADITIONAL FIRM VS. VISIONARY FIRMCLIENT RETENTION!

ACTION STEPS TO CONSIDERMeet with the [insert program name] team and learn moreEvaluate your current practiceEvaluate current relationships with other financial services providersSurvey your clients (gain feedback)Develop a written business/marketing plan Vision is good, but Action is great!

OPEN DISCUSSION AND QUESTIONS

Seminar Wrap UpComplete Seminar EvaluationCertificate of Completion Open for Q & A INVEST Financial Corporation, member FINRA/SIPC is not affiliated with of the other named entities, except Curian.