An advisory firm that works with certified public accountants helped a major CPA company launch a wealth management unit, as the two professions increasingly operate together.
Long Beach, California-based Windes, one of the top 100 largest accounting firms in the country, and Waltham, Massachusetts-based Integrated Partners — a registered investment advisory company with $12.7 billion in advisory assets, 200 financial advisors and 170 CPAs — opened Ovisto Wealth Management, the firms said last week. Windes owns the new wealth management company but will be using Integrated’s RIA, Integrated Wealth Concepts. Windes Managing Partner James Cordova and the firm led by Integrated President Paul Saganey had previously paired wealth and tax services together using Integrated’s 25-year-old CPA Alliance.
“This is no different from our existing program but an example of a firm taking advantage of all Integrated has to offer to help launch, promote and support the new services,” Saganey said in an email. “It may differ to other examples you are aware of as we helped the team at Windes to fulfill their vision of creating a wealth management division from scratch and introduced them to top-class financial advisors to service the offering.”
The accounting firm’s new wealth arm followed research from Fidelity Investments and consulting firm Herbers & Company earlier this year suggesting that client demand for tax services from their financial advisor represents a fruitful area for potential growth. Giant RIA aggregator firms such as Creative Planning, Savant Wealth Management and Choreo are all making large deals at the intersection of wealth management and taxes, and big players like LPL Financial are finding new ways to support CPA services at advisory practices. Some planners who are also tax professionals have been displaying the value of the two types of businesses together for many years, though.
“I can be their tax professional as well as their financial planning professional,” said Rupa Pereira, an advisor and enrolled agent who’s the founder of Apex, North Carolina-based FWJ Planning. The traditional wealth management industry practice has called for advising clients to speak with a tax professional on specific strategic questions, she noted in an interview.
“We are not doing clients any service by kind of deflecting our responsibilities. It bodes well for us to offer integrated and truly comprehensive planning,” Pereira added. “That is such a critical component of the overall financial plan that you build for your client as a financial planner.”
Discussing taxes and investments “all in the same meeting” works much better than suggesting clients speak with “the tax person” or “the wealth management person,” said Jack Oujo, a certified financial planner and CPA who’s the founder of Wall, New Jersey- and Fort Lauderdale, Florida-based Oujo Wealth Strategies.
“A great deal of all the money somebody has in their lifetime is contingent on how they arrange their tax affairs,” Oujo said in an interview. “I’m shocked I’ve been able to go my whole career without other accountants catching on to this.”
Those dynamics are playing out in a lot of industry M&A deals, according to Brian Lauzon, a managing director with Boston-based investment bank and transaction advisory firm Colchester Partners.
“Historically, wealth managers have often played the role of quarterback for their client,” Lauzon said. “What’s happening with these larger firms is that they’re increasingly taking a lot of these services and bringing them in-house.”
At Windes and Ovisto, lead advisor Mark Mitamura will lead a four-person team that includes advisors Whitney Massey and David Choi and relationship manager Allison Rozell.
“This is a major milestone for Windes,” Cordova said in an email. “It is integral for servicing our dynamic client base, a critical part of maintaining business relevance in our marketplace and it is a catalyst for our continued growth.”
Many accountants should look past a typical concern that wealth management clients will expect their portfolio’s value to rise no matter what’s happening in the economy, Oujo said. Clients “can handle these things,” as long as their advisor manages their expectations by testing their plan against the worst economic scenarios for them, he said. In addition, they’ll get to watch as clients put their children through college, retire comfortably and pay off mortgages.
“You’re very much a coach in the wealth management business. In the accounting business you’re looking backwards. In this business, you’re looking a lot more forward,” Oujo said. “They’re also going to find that the wealth management business is tremendously much more satisfying. … The emails and comments I’ve gotten from clients have been just so satisfying — a lot more than they’d ever be as a CPA.”
On the other side, preparing taxes often “opens the door to the planning discussion,” Pereira said. She described tax preparation as “a good icebreaker” that provides planners with a lot of prospective clients’ pertinent information and potential future strategies. However, planners should keep in mind that the IRS is “very strict” with its oversight of tax professionals, she said.
“They need to pay attention to what are the additional requirements,” Pereira said. “It’s important to know, as a financial planning firm, you’re beholden to the SEC and FINRA and the state regulators. But the minute that you call yourself a tax professional, you are subject to IRS scrutiny.”